<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    Form 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                   For the fiscal year ended December 31, 2007

                                       Or

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

            For the transition period from ___________ to ___________

                         Commission file number 0-30665

                          CNB Financial Services, Inc.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                              <C>
                 West Virginia                                55-0773918
       (State or other jurisdiction of           (I.R.S. Employer Identification No.)
        incorporation or organization)
</TABLE>

<TABLE>
<S>                                                           <C>
101 S. Washington Street, Berkeley Springs, WV                  25411
   (Address of principal executive offices)                   (Zip Code)
</TABLE>

                 Registrant's telephone number, (304) 258 - 1520

           Securities to be registered under Section 12(b) of the Act:
                                      None

           Securities to be registered under Section 12(g) of the Act:

                     Common Stock, Par Value $1.00 per share
                                (Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.

                                 Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act.

                                 Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for shorter periods that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

                                 Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [X]

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

         Large accelerated filer [ ]            Accelerated filer         [ ]

         Non-accelerated filer   [ ]            Smaller reporting company [X]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                                 Yes [ ] No [X]

The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asking price of such common equity, as of the
last


                                       1

<PAGE>

business day at the registrant's most recently completed second fiscal quarter
(June 30, 2007) was approximately $19.8 million. This amount was based on the
last closing sale price of a share of common stock of $70.00 as of the same
date. Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 454,949 shares of common
stock, par value $1 per share, as of March 28, 2008.

                      DOCUMENTS INCORPORATED BY REFERENCE:

                                      None


                                       2

<PAGE>

                   CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
                                TABLE OF CONTENTS

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                                                                            PAGE
                                                                            ----
<S>         <C>                                                             <C>
PART I
Item 1.     Business.....................................................     5
Item 1A.    Risk Factors.................................................     9
Item 2.     Properties...................................................    12
Item 3.     Legal Proceedings............................................    12
Item 4.     Submission of Matters to a Vote of Security Holders..........    12

PART II
Item 5.     Market for Registrant's Common Equity, Related Stockholder
               Matters and Issuer Purchases of Equity Securities.........    13
Item 6.     Selected Financial Data......................................    16
Item 7.     Management's Discussion and Analysis of Financial Condition
               and Results of Operations.................................    17
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk...    33
Item 8.     Financial Statements and Supplementary Data..................    34
Item 9.     Changes in and Disagreements with Accountants on Accounting
               and Financial Disclosures.................................    72
Item 9A(T). Controls and Procedures......................................    72
Item 9B.    Other Information............................................    72

PART III
Item 10.    Directors and Executive Officers of the Registrant...........    73
Item 11.    Executive Compensation.......................................    75
Item 12.    Security Ownership of Certain Beneficial Owners and
               Management................................................    81
Item 13.    Certain Relationships and Related Stockholder Matters........    82
Item 14.    Principal Accountant's Fees and Services.....................    82

PART IV
Item 15.    Exhibits and Financial Statement Schedules...................    84

SIGNATURES...............................................................    85
</TABLE>


                                       3
<PAGE>

FORWARD LOOKING STATEMENTS

     In our Annual Report and Form 10-K, we include forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products and similar matters. You can
identify these statements by forward-looking words such as "may," "will,"
"expect," "anticipate," "believe," "estimate," "plans," "intends," or similar
words or expressions. You should read statements that contain these words
carefully because they discuss our future expectations or state other
"forward-looking" information. We believe that it is important to communicate
our future expectations to our shareholders. However, there may be events in the
future that we are not able to predict accurately or control, including those
factors set forth under "Risk Factors" contained herein. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of the safe harbor, we must inform
you that a variety of factors could cause CNB Financial Services, Inc.'s actual
results and experiences to differ materially from the anticipated results or
other expectations expressed in these forward-looking statements. Our ability to
predict the results of the effect of future plans and strategies is inherently
uncertain. Some of the risks and uncertainties that may affect the operations,
performance, development and results of CNB Financial Services, Inc.'s business
include:

-    Changes in market interest rates;

-    Local and national economic trends and conditions;

-    Competition for products and services among community, regional and
     national financial institutions;

-    New services and product offerings by competitors;

-    Changes in customer preferences;

-    Changes in technology;

-    Legislative and regulatory changes;

-    Delinquency rates on loans; and

-    Changes in accounting principles, policies or guidelines;

     You should consider these factors in evaluating any forward-looking
statements and not place undue reliance on such statements. We are not obligated
to publicly update any forward looking statements we may make in this Form 10-K
or our Annual Report to reflect the impact of subsequent events.


                                       4

<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

ORGANIZATIONAL HISTORY AND SUBSIDIARIES

     CNB Financial Services, Inc. (the "Company") was organized under the laws
of West Virginia in March 2000 at the direction of the Board of Directors of CNB
Bank, Inc., formerly Citizens National Bank, (the "Bank") for the purpose of
becoming a financial services holding company. The Company and its subsidiary
are collectively referred to herein as "CNB".

     A special meeting of the Bank's shareholders was held on August 4, 2000,
and the shareholders approved the Agreement and Plan of Merger between the Bank
and the Company, whereby the Bank became a wholly-owned subsidiary of the
Company and the shareholders of the Bank became shareholders of the Company. The
merger became effective on August 31, 2000. Each Bank shareholder received two
shares of the Company stock for each share of the Bank's common stock. On August
31, 2000, the Company consummated its merger with the Bank and subsidiary, in a
tax-free exchange of stock. Shareholders of the Bank received two shares of CNB
Financial Services, Inc. common stock for each of the 229,024 shares of the
Bank's common stock. The merger was accounted for as a pooling of interests.

     CNB became a 50% member of a limited liability company, Morgan County Title
Insurance Agency, LLC in February 2001, for the purpose of selling title
insurance. As of January 2003, CNB's percentage of ownership in Morgan County
Title Insurance Agency, LLC decreased to 33%.

     The Bank was organized on June 20, 1934 and has operated as a national
banking association continuously until October 16, 2006, at which time the Bank
obtained a West Virginia state charter and began operating as a state banking
association. The Bank formed CNB Insurance Services, Inc., a wholly owned
subsidiary, which was a property and casualty insurance agency selling primarily
personal lines of insurance. On June 1, 2006, the Bank sold the assets of CNB
Insurance Services, Inc. to Maiden Financial. See Note 16: Discontinued
Operations in the Notes to Consolidated Financial Statements for further
discussion.

EMPLOYEES

     As of December 31, 2007 and 2006, CNB employed 97 and 100 full-time
equivalent employees, respectively.

BUSINESS OF CNB FINANCIAL SERVICES, INC. AND CNB BANK, INC.

     The Company's primary function is to direct, plan and coordinate the
business activities of the Bank and its subsidiary.

     CNB Bank, Inc. is a full-service commercial bank conducting general banking
and trust activities through six full-service offices and six automated teller
machines located in Morgan and Berkeley Counties, West Virginia and Washington
County, Maryland. The Bank exercised an option in December 2003 to purchase a
parcel of land in Falling Waters, Berkeley County, West Virginia. Construction
on an additional full-service branch began August 2004 and was completed in
April 2005.

          On January 26, 2004, CNB entered into an agreement to purchase certain
assets and liabilities associated with the Hancock Branch of Fidelity Bank, a
subsidiary bank of Mercantile Bankshares Corporation (formerly Home Federal).
The purchase, which took place on June 11, 2004, increased the assets and
liabilities of CNB by $14.6 million. CNB assumed responsibility for all the
deposit services including checking, savings and certificates of deposit.
Additionally, CNB acquired loans, equipment and leasehold improvements and
assumed the lease for the real estate located at 333 East Main Street, Hancock,
Maryland.

     CNB Bank, Inc. accepts time, demand and savings deposits including NOW
accounts, regular savings accounts, money market accounts, fixed-rate
certificates of deposit and club accounts. In addition, the Bank provides safe
deposit box rentals, wire transfer services and 24-hour ATM services through a
regional network known as STAR. STAR is a participant in the nationwide Cirrus
network.

     The Bank offers a full spectrum of lending services to its customers,
including commercial loans and lines of credit, residential real estate loans,
consumer installment loans and other personal loans. Commercial loans are
generally secured by various collateral, including commercial real estate,
accounts receivable and business machinery and equipment. Residential real


                                       5

<PAGE>

estate loans consist primarily of mortgages on the borrower's personal
residence, and are typically secured by a first lien on the subject property.
Consumer and personal loans are generally secured, often by first liens on
automobiles, consumer goods or depository accounts. A special effort is made to
keep loan products as flexible as possible within the guidelines of prudent
banking practices in terms of interest rate risk and credit risk. Bank lending
personnel adhere to established lending limits and authorities based on each
individual's lending expertise and experience.

     The Bank's trust department acts as trustee under trusts and wills, as
executor of wills and administrator of estates, as guardian for estates of
minors and incompetents and serves in various corporate trust capacities.

COMPETITION

     CNB Bank, Inc. faces a high degree of competition for all its services from
local banks. Within its market area of Morgan and Berkeley Counties in West
Virginia and Washington County in Maryland, numerous competing commercial banks
exist.

     Nonbank competition has also increased in recent years locally by the
establishment of finance and mortgage companies and the expansion of insurance
operations and credit unions, as well as from mutual funds located throughout
the country.

     West Virginia banks are allowed unlimited branch banking throughout the
State. The Interstate Banking and Branch Efficiency Act of 1994 also authorizes
interstate branching by acquisition and consolidation nationwide. These and
similar provisions impacting both the banking and thrift industries may serve to
intensify future competition within the Bank's market.

AVAILABLE INFORMATION

     Our Internet address is www.cnbwv.com. The SEC maintains an Internet
website at http://www.sec.gov that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC, and our annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available,
free of charge, as soon as reasonably practicable after we electronically file
such material with, or furnish it to, the SEC. In addition, any document filed
by the company with the SEC can be read and copied at the SEC's public reference
facilities at 100 F Street, NE, Washington, DC 20549. The public may obtain
information on the operation of the public reference room by calling the SEC at
1-800-SEC-0330. Copies of documents can also be obtained free of charge by any
shareholder by writing to Rebecca S. Stotler, Senior VP/CFO, CNB Financial
Services, Inc., 101 S. Washington Street, Berkeley Springs, WV 25411.

SUPERVISION AND REGULATION

     The following is a summary of certain statutes and regulations affecting
the Company and its subsidiaries and is qualified in its entirety by reference
to such statutes and regulations:

          BANK HOLDING COMPANY REGULATION. The Company is a bank holding company
under the Bank Holding Company Act of 1956 ("BHCA"), which restricts the
activities of the Company and any acquisition by the Company of voting stock or
assets of any bank, savings association or other company. The Company is subject
to the reporting requirements of, and examination and regulation by, the Federal
Reserve Board. The Company's subsidiary bank is subject to restrictions imposed
by the Federal Reserve Act on transactions with affiliates, including any loans
or extensions of credit to the Company or its subsidiaries, investments in the
stock or other securities thereof and the taking of such stock or securities as
collateral for loans to any borrower; the issuance of guarantees, acceptances or
letters of credit on behalf of the Company and its subsidiaries; purchases or
sales of securities or other assets; and the payment of money or furnishing of
services to the Company and other subsidiaries. The Bank is prohibited from
acquiring direct or indirect control of more than 5% of any class of voting
stock or substantially all of the assets of any bank holding company without the
prior approval of the Federal Reserve Board. The Company and its subsidiaries
are prohibited from engaging in certain tying arrangements in connection with
extensions of credit and/or the provision of other property or services to a
customer by the Company or its subsidiaries.

          On July 30, 2002, the Senate and the House of Representatives of the
United State (Congress) enacted the Sarbanes-Oxley Act of 2002, a law that
addresses, among other issues, corporate governance, auditing and accounting,
executive compensation, and enhanced and timely disclosure of corporate
information. The New York Stock Exchange proposed corporate governance rules
that were enacted by the Securities and Exchange Commission. The changes are
intended to allow stockholders to more easily and efficiently monitor the
performance of companies and directors.


                                       6

<PAGE>

          Effective August 29, 2002, as directed by Section 302(a) of
Sarbanes-Oxley, the Bank's chief executive officer and chief financial officer
are each required to certify that CNB's Quarterly and Annual Reports do not
contain any untrue statement of a material fact. The rules have several
requirements, including having these officers certify that: they are responsible
for establishing, maintaining, and regularly evaluating the effectiveness of
CNB's internal controls; they have made certain disclosures to CNB's auditors
and the audit committee of the Board of Directors about CNB's internal controls;
and they have included information in CNB's Quarterly and Annual Reports about
their evaluation and whether there have been significant changes in CNB's
internal controls or in other factors that could significantly affect internal
controls subsequent to the evaluation. Effective in 2009, the audit requirements
related to internal controls contained in Section 404 of Sarbanes-Oxley will
become applicable to CNB.

          The BHCA also permits the Company to purchase or redeem its own
securities. However, Regulation Y provides that prior notice must be given to
the Federal Reserve Board if the gross consideration for such purchase or
consideration, when aggregated with the net consideration paid by the Company
for all such purchases or redemptions during the preceding 12 months, is equal
to 10 percent or more of the Company's consolidated net worth. Prior notice is
not required if (i) both before and immediately after the redemption, the bank
holding company is well-capitalized; (ii) the financial holding company is
well-managed and (iii) the bank holding company is not the subject of any
unresolved supervisory issues.

          The Gramm-Leach-Bliley Act (also known as the Financial Services
Modernization Act of 1999) permits bank holding companies to become financial
holding companies. This allows them to affiliate with securities firms and
insurance companies and to engage in other activities that are financial in
nature. A bank holding company may become a financial holding company if each of
its subsidiary banks is well capitalized, is well managed and has at least a
satisfactory rating under the Community Reinvestment Act. No regulatory approval
will be required for a financial holding company to acquire a company, other
than a bank or savings association, engaged in activities that are financial in
nature or incidental to activities that are financial in nature, as determined
by the Federal Reserve Board.

          The Financial Services Modernization Act defines "financial in nature"
to include: securities underwriting, dealing and market making; sponsoring
mutual funds and investment companies; insurance underwriting and agency;
merchant banking activities; and activities that the Federal Reserve Board has
determined to be closely related to banking. A bank also may engage, subject to
limitations on investment, in activities that are financial in nature, other
than insurance underwriting, insurance company portfolio investment, real estate
development and real estate investment, through a financial subsidiary of the
bank, if the bank is well capitalized, well managed and has at least a
satisfactory Community Reinvestment Act rating.

          BANK SUBSIDIARY REGULATION. The Bank converted from a national bank to
a state bank in 2006 and is regulated by the West Virginia Division of Banking
and the Federal Deposit Insurance Corporation. The Bank is also subject to
supervision, examination and regulation by the Federal Reserve System, and as
such is subject to applicable provisions of the Federal Reserve Act and
regulations issued thereunder.

          The deposits of the Bank are insured by the Federal Deposit Insurance
Corporation ("FDIC") to the extent provided by law. Accordingly, the Bank is
also subject to regulation by the FDIC. The FDIC may terminate a bank's deposit
insurance upon finding that the institution has engaged in unsafe or unsound
practices, is in an unsafe or unsound condition to continue operations, or has
violated any applicable law, regulation, rule, order or condition enacted or
imposed by the bank's regulatory agency.

          The Bank is a member of the Federal Home Loan Bank of Pittsburgh. The
FHLB provided credit to its member in the form of advances. As a member of the
FHLB of Pittsburgh, the bank must maintain an investment in the capital stock of
that FHLB in an amount equal to the greater of 1% of the aggregate outstanding
principal amount of its respective residential mortgage loans, home purchase
contracts and similar obligations at the beginning of each year or 5% of its
advances from the FHLB.

CAPITAL REQUIREMENTS

          As a bank holding company, the Company is subject to Federal Reserve
Board risk-based capital guidelines. The guidelines establish a systematic
framework that makes regulatory capital requirements more sensitive to
differences in risk profiles among banking organizations, takes off-balance
sheet exposures into account and minimizes disincentives to holding liquid,
low-risk assets. Under the guidelines, bank holding companies must maintain
capital sufficient to meet both a risk-based


                                       7

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asset ratio test and leverage ratio test on a consolidated basis. The risk-based
ratio is determined by allocating assets and specified off-balance-sheet
commitments into four weighted categories, with higher levels of capital being
required for categories perceived as representing greater risk. The Bank is
subject to substantially similar capital requirements adopted by its applicable
regulatory agencies. In addition, the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") established a regulatory framework which ties
the level of supervisory intervention by bank regulatory authorities primarily
to a depository institution's capital category. Among other things, FDICIA
authorized regulatory authorities to take "prompt corrective action" with
respect to depository institutions that do not meet minimum capital
requirements. FDICIA established five capital tiers: well capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized and
critically undercapitalized. The Company is well capitalized as detailed in Note
20: Regulatory Matters in the Notes to Consolidated Financial Statements.

FEDERAL AND STATE LAWS

          The Bank is subject to regulatory oversight under various consumer
protection and fair lending laws. These laws govern, among other things,
truth-in-lending disclosure, equal credit opportunity, fair credit reporting and
community reinvestment. Failure to abide by federal laws and regulations
governing community reinvestment could limit the ability of a bank to open a new
branch or engage in a merger transaction. Community reinvestment regulations
evaluate how well and to what extent a bank lends and invests in its designated
service area, with particular emphasis on low-to-moderate income communities and
borrowers in such areas.

MONETARY POLICY AND ECONOMIC CONDITIONS

          The business of financial institutions is affected not only by general
economic conditions, but also by the policies of various governmental regulatory
agencies, including the Federal Reserve Board. The Federal Reserve Board
regulates money and credit conditions and interest rates to influence general
economic conditions primarily through open market operations in U.S. government
securities, changes in the discount rate on bank borrowings and changes in the
reserve requirements against depository institutions' deposits. These policies
and regulations significantly affect the overall growth and distribution of
loans, investments and deposits, and the interest rates charged on loans, as
well as the interest rates paid on deposits and accounts.

          The monetary policies of the Federal Reserve Board have had a
significant effect on the operating results of financial institutions in the
past and are expected to continue to have significant effects in the future. In
view of the changing conditions in the economy and the money markets and the
activities of monetary and fiscal authorities, the Company cannot definitely
predict future changes in interest rates, credit availability or deposit levels.

EFFECT OF ENVIRONMENTAL REGULATION

          The Bank's primary exposure to environmental risk is through its
lending activities. In cases when management believes environmental risk
potentially exists, the Bank mitigates its environmental risk exposures by
requiring environmental site assessments at the time of loan origination to
confirm collateral quality as to commercial real estate parcels posing higher
than normal potential for environmental impact, as determined by reference to
present and past uses of the subject property and adjacent sites. Environmental
assessments are typically required prior to any foreclosure activity involving
non-residential real estate collateral.

          With regard to residential real estate lending, management reviews
those loans with inherent environmental risk on an individual basis and makes
decisions based on the dollar amount of the loan and the materiality of the
specific credit.

          The Company anticipates no material effect on anticipated capital
expenditures, earnings or competitive position as a result of compliance with
federal, state or local environmental protection laws or regulations.

INTERNATIONAL MONEY LAUNDERING ABATEMENT AND ANTI-TERRORIST FINANCING ACT OF
2001 (U.S. PATRIOT ACT)

          The International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001 (the "Patriot Act") was adopted in response to the
September 11, 2001 terrorist attacks. The Patriot Act provides law enforcement
with greater powers to investigate terrorism and prevent future terrorist acts.
Among the broad-reaching provisions contained in the Patriot Act are several
designed to deter terrorists' ability to launder money in the United States and
provide law enforcement with


                                       8

<PAGE>

additional powers to investigate how terrorists and terrorist organizations are
financed. The Patriot Act creates additional requirements for banks, which were
already subject to similar regulations. The Patriot Act authorizes the Secretary
of the Treasury to require financial institutions to take certain "special
measures" when the Secretary suspects that certain transactions or accounts are
related to money laundering. These special measures may be ordered when the
Secretary suspects that a jurisdiction outside of the United States, a financial
institution operating outside of the United States, a class of transactions
involving a jurisdiction outside of the United States or certain types of
accounts are of "primary money laundering concern." The special measures include
the following: (a) require financial institutions to keep records and report on
the transactions or accounts at issue; (b) require financial institutions to
obtain and retain information related to the beneficial ownership of any account
opened or maintained by foreign persons; (c) require financial institutions to
identify each customer who is permitted to use a payable-through or
correspondent account and obtain certain information from each customer
permitted to use the account; and (d) prohibit or impose conditions on the
opening or maintaining of correspondent or payable-through accounts.

CRITICAL ACCOUNTING POLICIES

     CNB's financial position and results of operations are impacted by
management's application of accounting policies involving judgments made to
arrive at the carrying value of certain assets. Management's greatest challenge
in implementing its policies is the need to make estimates about the effect of
matters that are inherently less than certain. For a detailed discussion of
CNB's significant accounting policies, see Note 1: Summary of Significant
Accounting Policies in the Notes to Consolidated Financial Statements. A
material estimate that is susceptible to significant change is the determination
of the allowance for loan losses. Both the estimates of the amount of the
allowance for loan losses and the placement of loans on non-accrual status
affect the carrying amount of the loan portfolio and accrued interest
receivable.

     The allowance for loan losses is a subjective judgment that management must
make regarding the loan portfolio, and is established and maintained at levels
that management believes are adequate to cover losses resulting from the
inability of borrowers to make required payments on loans. Where there is a
question as to the impairment of a specific loan, management obtains valuations
of the property or collateral securing the loan, and current financial
information of the borrower, including financial statements, when available.
Since the calculation of appropriate loan loss allowances relies on management's
estimates and judgments relating to inherently uncertain events, actual results
may differ from these estimates. For a more detailed discussion on the allowance
for loan losses, see Nonperforming Loans and Allowance For Loan Losses in this
Management's Discussion and Analysis and Allowance for Loan Losses in Note 1:
Summary of Significant Accounting Policies and Note 4: Loans and Leases
Receivable in the Notes to Consolidated Financial Statements.

ITEM 1A. RISK FACTORS

     This report contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below, as well as
those discussed elsewhere in this report.

THE BANKING BUSINESS IS VERY COMPETITIVE.

     The banking business is generally a highly competitive business. Our total
assets have grown from approximately $201.1 million at December 31, 2003, to
$290.4 million at December 31, 2007. Our business plan calls for continued
growth. Our ability to continue to grow depends, in part, upon our ability to
successfully attract deposits and identify favorable loan and investment
opportunities. In the event that we do not continue to grow, our results of
operations could be adversely impacted.

     Our ability to grow successfully will depend on whether we can continue to
fund this growth while maintaining cost controls and asset quality, as well as
on factors beyond our control, such as national and regional economic conditions
and interest rate trends. If we are not able to control costs and maintain asset
quality, such growth could adversely impact our earnings and financial
condition.

     As of June 30, 2007, based on an FDIC analysis done as of June 30 each
year, there were twelve other banks in CNB's market area. The total Morgan
County commercial bank deposits, which include a total of five banking offices,
as of June 30, 2007, were in excess of $229.6 million. The total Berkeley County
commercial bank deposits, which include a total of twenty eight banking offices,
as of June 30, 2007, were in excess of $1.0 billion. The total Hancock, Maryland
commercial bank deposits, which include three banking offices, as of June 30,
2007, were in excess of $90.7 million. At this same date CNB had a


                                       9

<PAGE>

72.9% share of the Morgan County commercial bank deposits, a 5.0% share of the
Berkeley County commercial bank deposits and a 30.9% share of the Hancock,
Maryland commercial bank deposits. CNB represents Morgan County's only locally
owned bank, as the other existing commercial banks have their parent-Bank
headquarters in Charleston, West Virginia (City National) and Charlotte, North
Carolina (BB&T).

     For most of the services which CNB provides, there is also competition from
financial institutions other than commercial banks in attracting deposits and in
making loans with local offices and those that do business over the internet. We
compete for loans principally through the interest rates and loan fees we charge
and the efficiency and quality of services we provide. Increasing levels of
competition in our banking and financial services businesses may reduce our
market share or cause the prices we charge for our services to fall. Our results
may differ in future periods depending upon the nature or level of competition.
In addition, some traditional banking services or competing services are offered
by insurance companies, investment counseling firms and other business firms and
individuals. Many of CNB's competitors have significantly greater financial and
marketing resources than we have.

     The existence of larger financial institutions in Morgan and Berkeley
Counties, West Virginia and Washington County, Maryland, some of which are owned
by larger regional or national companies, influence the competition in CNB's
market area. The principal competitive factors in the market for deposits and
loans are interest rates, either paid on deposits or charged on loans. West
Virginia law allows statewide branch banking which provides increased
opportunities for CNB, but it also increases the potential competition for our
service area. In addition, in 1994, Congress passed the Riegle-Neal Interstate
Banking and Branching Efficiency Act. Under this Act, absent contrary action by
a state's legislature, interstate branch banking was allowed to occur after June
1, 1997. States are permitted to elect to participate to a variety of degrees in
interstate banking or states may elect to "opt out." In 1996, the West Virginia
Legislature elected to "opt in." Accordingly, out-of-state banks may form de
novo banks or may acquire existing branches of West Virginia banks on a
reciprocal basis.

IN THE FUTURE, CNB'S LENDING LIMIT COULD CREATE A COMPETITIVE DISADVANTAGE.

     In the future, CNB may not be able to attract larger volume customers
because the size of loans that CNB can offer to potential customers is less than
the size of the loans that many of CNB's larger competitors can offer.
Accordingly, CNB may lose customers seeking large loans to mortgage companies,
larger commercial banks and other financial institutions. We anticipate that our
lending limit will continue to increase proportionately with CNB's growth in
earnings; however, CNB may not be able to successfully attract or maintain
larger customers.

CNB ENGAGES IN COMMERCIAL AND CONSUMER LENDING ACTIVITIES WHICH ARE RISKIER THAN
RESIDENTIAL REAL ESTATE LENDING.

     CNB makes loans that involve a greater degree of risk than loans involving
residential real estate lending. Commercial business loans may involve greater
risks than other types of lending because they are often made based on varying
forms of collateral, and repayment of these loans often depends on the success
of the commercial venture. Consumer loans may involve greater risk because
adverse changes in borrowers' incomes and employment after funding of the loans
may impact their abilities to repay the loans.

     CNB's loan portfolio at December 31, 2007, consists of the following:

<TABLE>
<CAPTION>
TYPE OF LOAN                                        PERCENTAGE OF PORTFOLIO
------------                                        -----------------------
<S>                                                 <C>
Residential Real Estate Loans                                 69%
Commercial Loans, principally real estate secured             22%
Consumer Loans                                                 9%
</TABLE>

CNB HAS LIMITED CONTROL OVER ITS PROFITABILITY BECAUSE CNB CANNOT CONTROL THE
VARIOUS FACTORS THAT CAN CAUSE FLUCTUATIONS IN INTEREST RATES.

     Aside from credit risk, the most significant risk resulting from CNB's
normal course of business, extending loans and accepting deposits, is interest
rate risk. If market interest rate fluctuations cause CNB's cost of funds to
increase faster than the


                                       10

<PAGE>

yield of its interest-earning assets, then its net interest income will be
reduced. CNB's results of operations depend to a large extent on the level of
net interest income, which is the difference between income from
interest-earning assets, such as loans and investment securities, and interest
expense on interest-bearing liabilities, such as deposits and borrowings.
Interest rates are highly sensitive to many factors that are beyond CNB's
control, including general economic conditions and the policies of various
governmental and regulatory authorities. In establishing interest rates on
deposit accounts, CNB considers various factors, including rates offered by
competing institutions in their local market. In doing so, CNB does not try to
offer the highest rates in their local market which may result in a loss of
deposits in other institutions offering marginally higher rates.

     To effectively monitor the interest rate risk discussed above, CNB uses a
computer model to project the change in net interest income under various
changes in interest rates. To provide guidance to management, CNB's board of
directors, through its Asset/Liability/Investment Committee, has established a
policy related thereto which includes interest rate risk parameters within which
to operate. As of December 31, 2007, CNB's interest rate risk is within the
parameters.

CNB'S SUCCESS DEPENDS ON CNB'S MANAGEMENT TEAM.

     The departure of one or more of CNB's officers or other key personnel could
adversely affect CNB's operations and financial position. The Company's
management makes most decisions that involve CNB's operations. The key personnel
have all been with CNB since 2001. They include Thomas F. Rokisky, Patricia C.
Muldoon and Rebecca S, Stotler.

AN ECONOMIC SLOWDOWN IN OUR MARKET AREA COULD HURT CNB'S BUSINESS.

     Because we focus our business in the Eastern Panhandle of West Virginia and
the western part of Maryland, an economic slowdown in these areas could hurt our
business. An economic slowdown could have the following consequences:

     -    Loan delinquencies may increase;

     -    Problem assets and foreclosures may increase;

     -    Demand for the products and services of CNB may decline; and

     -    Collateral (including real estate) for loans made by CNB may decline
          in value, in turn reducing customers' borrowing power and making
          existing loans less secure.

     At the end of 2007, there was an announced closing of another large
manufacturing plant within the bank's lending area. This closing along with the
general slowdown in the markets has caused an increase in delinquencies.
Management anticipates this trend continuing into 2008.

CNB IS HIGHLY REGULATED.

     The operations of CNB are subject to extensive regulation by federal, state
and local governmental authorities and are subject to various laws and judicial
and administrative decisions imposing requirements and restrictions on them.
Policies adopted or required by these governmental authorities can affect CNB's
business operations and the availability, growth and distribution of CNB's
investments, borrowings and deposits.

CNB MAY INCUR INCREASED CHARGE-OFFS AND ADDITIONAL LOAN LOSS PROVISION DUE TO
NEGATIVE CREDIT IN THE FUTURE.

     In the future, CNB could experience negative credit quality trends that
could head to a deterioration of asset quality. Such deterioration could require
CNB to incur loan charge-offs in the future and incur additional loan loss
provision, both of which would have the effect of decreasing earnings.

MARKETABILITY OF COMMON STOCK.

     There is no active market for our outstanding shares, and it is unlikely
that an established market for our shares will develop in the near future. We
presently do not intend to seek listing of the shares on any securities
exchange, or quotation on the Nasdaq interdealer quotation system. It is not
known whether significant trading activity will take place for several years, if
at all. Accordingly, a shareholder may not be able to sell their shares
immediately upon offering them for sale.


                                       11

<PAGE>

ITEM 2. PROPERTIES

CNB Financial Services, Inc.

     CNB's headquarters are located at the main office of CNB Bank, Inc. located
at 101 South Washington Street, Berkeley Springs, West Virginia.

CNB Bank, Inc.

     The principal executive office and main banking office is located at 101
South Washington Street, Berkeley Springs, West Virginia. In addition, the bank
has owned and operated a full service branch bank located at 2450 Valley Road,
Berkeley Springs, West Virginia since 1991. In October 1998, the bank opened a
full service branch located at 2646 Hedgesville Road, Martinsburg, West
Virginia. In March 2002, the bank opened a full service branch located at 14994
Apple Harvest Drive, Martinsburg, West Virginia. In April 2005, the bank opened
an additional full service branch located at 1231 T.J. Jackson Drive, Falling
Waters, West Virginia. On January 26, 2004, CNB entered into an agreement to
purchase certain assets and liabilities associated with the Hancock Branch of
Fidelity Bank, a subsidiary bank of Mercantile Bankshares Corporation (formerly
Home Federal). The purchase, which took place on June 11, 2004, increased the
assets and liabilities of CNB by $14.6 million. CNB assumed responsibility for
all the deposit services including checking, savings and certificate of
deposits. Additionally, CNB acquired loans, equipment and leasehold improvements
and assumed the lease for the real estate located at 333 East Main Street,
Hancock, Maryland. Each of the bank's locations provides ATM services, in
addition to traditional lobby and drive-in services. In November of 1998, the
bank acquired CNB Insurance Services, Inc. which was operated out of the main
office in Berkeley Springs until June 1, 2006 at which time the Bank sold the
assets of CNB Insurance Services, Inc. to Maiden Financial. The main office and
branches are owned free and clear of any indebtedness. The Bank owns all of the
facilities described above with the exception of the Hancock, Maryland branch on
which the bank owns improvements situated on leased land. Management believes
that the facilities are of sound construction, in good operating condition, are
appropriately insured and are adequately equipped for carrying on the business
of the Company. The net book value of the bank's premises and equipment as of
December 31, 2007 is $6.1 million.

ITEM 3. LEGAL PROCEEDINGS

     In the ordinary course of business, the Bank and its subsidiary are
involved in various legal proceedings.

     In the opinion of the management of CNB, there are no proceedings pending
to which CNB is a party or to which its property is subject, which, if
determined adversely to CNB, would be material in relation to CNB's financial
condition. There are no proceedings pending other than ordinary routine
litigation incident to the business of CNB. In addition, no material proceedings
are pending or are known to be threatened or contemplated against CNB by
government authorities.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of 2007.


                                       12

<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

     The stock of CNB Financial Services, Inc., and prior to the formation of
CNB, the Bank, is not listed on an exchange and is not heavily traded. The
trades that have occurred are those that, to management's knowledge, have been
individually arranged. The prices listed below are based upon information
available to management through discussions with shareholders, and to the best
of management's knowledge, accurately represent the amount at which its stock
was traded during the periods indicated. Prices reflect amounts paid by
purchasers of the stock and, therefore, may include commissions or fees. The
amounts of such commissions or fees, if any, are not known to management. No
attempt was made by management to ascertain the prices for every sale made
during these periods.

     Based on information that management is aware of, the majority of shares
sold during 2007 and 2006 were at a price that ranged from $67 to $80 per share.
Book value per share increased from $44.37 at December 31, 2006 to $49.91 at
December 31, 2007.

     On August 23, 2007, the Board of Directors approved a stock repurchase
program to repurchase issued shares of common stock of CNB Financial Services,
Inc. Management is authozired to repurchase up to 45,804 shares or 10% of the
outstanding shares of CNB Financial Services, Inc. common stock at the
prevailing fair market value. The stock repurchase program will terminate upon
the repurchase of 45,804 shares. Through this program as of December 31, 2007,
the Bank has repurchased 3,099 shares of CNB Financial Services, Inc. common
stock of which 1,000 shares was purchased in the fourth quarter reducing
shareholders' equity by a total of $207,633. Below is a listing of the shares
repurchased during 2007.

<TABLE>
<CAPTION>
                     Total Number                    Total Number of Shares Purchased       Maximum Number of Shares
                       of Shares     Average Price     as Part of Publicly Announced    that may yet be purchased under
Period                 Purchased    Paid per Share           Plans or Programs               the Plans or Programs
------               ------------   --------------   --------------------------------   -------------------------------
<S>                  <C>            <C>              <C>                                <C>
September 1, 2007
September 30, 2007       2,099          $67.00                     2,099                             43,705

October 1, 2007
October 31,2007          1,000          $67.00                     1,000                             42,705

November 1, 2007
November 30, 2007           --          $   --                        --                             42,705

December 1, 2007
December 31, 2007           --          $   --                        --                             42,705
                         -----                                     -----
   Total                 3,099                                     3,099
                         =====                                     =====
</TABLE>

     Dividends which have been declared by the Board of Directors semiannually,
increased from $1.54 per share in 2006 to $1.69 per share in 2007, a 9.7%
increase. The ability of CNB to pay dividends is subject to certain limitations
imposed by various banking regulations. See Note 20: Regulatory Matters in the
Notes to Consolidated Financial Statements for a more detailed discussion on the
limitations. As of March 3, 2008, the number of record holders excluding
individual participants in securities positions listings was 661.

     The prices listed below represent the high and low market prices for stock
trades reported during each quarter.


                                       13

<PAGE>

<TABLE>
<CAPTION>
                                   PER SHARE
                  HIGH      LOW     DIVIDEND
                 ------   ------   ---------
<S>              <C>      <C>      <C>
2007
First quarter    $80.00   $72.00
Second quarter   $80.00   $70.00     $0.50
Third quarter    $72.00   $71.00
Fourth quarter   $72.00   $67.00     $1.19

2006
First quarter    $80.00   $67.00
Second quarter   $80.00   $78.00     $0.45
Third quarter    $73.00   $71.00
Fourth quarter   $73.00   $73.00     $1.09
</TABLE>

     CNB's stock is not traded on an established exchange and there are no known
market makers, therefore there is no established public trading market for CNB's
stock. The prices listed above are based upon information available to
management through discussions with shareholders, and to the best of
management's knowledge, accurately represent the amount at which its stock was
traded during the periods indicated. Prices reflect amounts paid by purchasers
of the stock and, therefore, may include commissions or fees. The amounts of
such commissions or fees, if any, are not known to management. No attempt was
made by management to ascertain the prices for every sale made during these
periods.

The following graph compares the yearly percentage change in CNB's cumulative
total shareholder return on common stock for the five-year period ending
December 31, 2007, with the cumulative total return of the Hemscott Index (SIC
Code Index 6022-State Commercial Banks). Shareholders may obtain a copy of the
index by calling Hemscott, Inc., at telephone number (804) 775-8118. There is no
assurance that CNB's stock performance will continue in the future with the same
or similar trends as depicted in the graph.


                                       14

<PAGE>

                      COMPARISON OF CUMULATIVE TOTAL RETURN
                       AMONG CNB FINANCIAL SERVICES, INC.,
                        HEMSCOTT INDEX AND SIC CODE INDEX

                               (PERFORMANCE GRAPH)


              COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
         COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS

<TABLE>
<CAPTION>

                              ----------------------- FISCAL YEAR ENDING ----------------------
COMPANY/INDEX/MARKET          12/31/2002 12/31/2003 12/31/2004 12/30/2005 12/29/2006 12/31/2007

<S>                           <C>        <C>        <C>        <C>        <C>        <C>
CNB FINANCIAL                   100.00     131.22     132.01     159.83     177.67     169.10
STATE COMMERCIAL BANKS          100.00     130.40     141.81     139.44     158.68     141.53
HEMSCOTT INDEX                  100.00     133.13     149.33     159.90     185.09     196.97
</TABLE>


                     ASSUMES $100 INVESTED ON DEC. 31, 2002
                           ASSUMES DIVIDEND REINVESTED
                        FISCAL YEAR ENDING DEC. 31, 2007

SIC Code Index is SIC 6022 State Commercial Banks

Hemscott Index is Hemscott Financial Information Composite Market Value Index

     The information used to determine CNB's cumulative total shareholder return
on its common stock is based upon information furnished to CNB or the bank by
one or more parties involved in purchases or sales of CNB's common stock. There
is no public market for CNB's common stock, and share prices used to determine
CNB's cumulative shareholder return are based upon sporadic trading activity in
privately negotiated transactions. We have not attempted to verify or determine
the accuracy of the representations made to CNB or the bank.


                                       15
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

TABLE 1. FIVE YEAR SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
                                      2007       2006       2005       2004       2003
                                    --------   --------   --------   --------   --------
                                           In thousands except for per share data
<S>                                 <C>        <C>        <C>        <C>        <C>
AT YEAR-END
   Total assets                     $290,415   $276,069   $258,953   $236,998   $201,056
   Securities available for sale      66,017     50,873     55,194     59,740     39,362
   Loans and lease, net of
      unearned income                202,669    204,319    180,207    154,920    146,273
   Deposits                          226,645    233,083    219,288    207,729    180,899
   Shareholders' equity               22,821     20,322     19,008     18,149     16,569

SIGNIFICANT RATIOS
   Return on average assets             0.90%      0.92%      1.00%      1.07%      0.89%
   Return on average
      shareholders' equity             11.88      12.46      12.91      13.38      10.44
   Average shareholders' equity
      to average assets                 7.55       7.35       7.76       8.03       8.48
   Net interest margin                  3.53       3.77       4.12       4.11       3.83

SUMMARY OF OPERATIONS
   Interest income                  $ 17,201   $ 15,989   $ 13,420   $ 11,715   $ 11,569
   Interest expense                    7,725      6,269      3,850      3,169      4,152
   Net interest income                 9,476      9,720      9,570      8,546      7,417
   Provision for loan losses             169        275        352        393        312
   Net interest income after
      provision for loan losses        9,307      9,445      9,218      8,153      7,105
   Non-interest income                 2,403      2,025      2,007      1,972      1,728
   Non-interest expense                8,015      7,817      7,541      6,789      6,007
   Income before income taxes and
      discontinued operations          3,695      3,653      3,684      3,336      2,826
   Discontinued operations                --        124         --         --         --
   Income tax expense                  1,191      1,308      1,238        992      1,083
   Net income                          2,504      2,469      2,446      2,344      1,743

PER SHARE DATA
   Net income                       $   5.48   $   5.39   $   5.34   $   5.12   $   3.80
   Cash dividends                       1.69       1.54       1.44       1.38       1.20
   Net book value                      49.91      44.37      41.50      39.62      36.17
</TABLE>


                                       16

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     The following discussion and analysis presents the significant changes in
financial condition and results of operations of CNB, for the years ended
December 31, 2007 and 2006. This discussion and analysis should be read in
conjunction with the audited, consolidated financial statements and accompanying
notes. This discussion includes forward-looking statements based upon
management's expectations; actual results may differ. Amounts and percentages
used in this discussion have been rounded. All average balances are based on
monthly averages.

EARNINGS SUMMARY

     CNB had net income totaling $2.5 million or $5.48 per share, $2.5 million
or $5.39 per share and $2.4 million or $5.34 per share for fiscal years 2007,
2006 and 2005, respectively. Annualized return on average assets and average
equity were .9% and 11.9%, respectively for 2007 compared to .9% and 12.5% for
2006 and 1.0% and 12.9% for 2005.

     Net income for the year 2008 is expected to be impacted by the continued
slowing in the Bank's loan demand along with the continued tightening of the
Bank's net interest margin caused by the increased cost of funds. Other
significant factors affecting the 2008 net income are expenses to be incurred
related to the Sarbanes-Oxley Act which are expected to be approximately $55,000
and the increased expense of FDIC insurance which is expected to be
approximately $100,000.

NET INTEREST INCOME

     Net interest income represents the primary component of the Bank's
earnings. It is the difference between interest and fee income related to
earning assets and interest expense incurred to carry interest-bearing
liabilities. Net interest income is impacted by changes in the volume and mix of
interest-earning assets and interest-bearing liabilities, as well as by changing
interest rates. In order to manage these changes, their impact on net interest
income and the risk associated with them, the Bank utilizes an ongoing
asset/liability management program. This program includes analysis of the
difference between rate sensitive assets and rate sensitive liabilities,
earnings sensitivity to rate changes, and source and use of funds. A discussion
of net interest income and the factors impacting it is presented below.

     Net interest income in 2007 decreased by $244,000 or 2.5% over 2006.
Interest income in 2007 increased by $1.2 million or 7.6% compared to 2006,
while interest expense increased by $1.5 million or 23.2% during 2007 as
compared to 2006. Interest income increased during 2007 compared to 2006 as a
result of an increase in the average balances of loans, investment securities
and federal funds sold. Average rates earned on these interest earning assets
also increased during 2007 compared to 2006. Interest expense increased during
2007 compared to 2006 as a result of an increase in the average balance of money
market accounts and time deposit accounts and an increase in the average rates
paid on those specific interest bearing liability accounts. However, the
increase in interest expense was offset by a decrease in the average balance of
savings accounts, NOW accounts and borrowings and a decrease in the average
rates paid on them.

     Net interest income in 2006 increased by $150,000 or 1.6% over 2005.
Interest income in 2006 increased by $2.6 million or 19.1% compared to 2005,
while interest expense increased by $2.4 million or 62.8% during 2006 as
compared to 2005. Interest income increased during 2006 compared to 2005 as a
result of an increase in the average balances of loans and investment
securities. Average rates earned on these interest earning assets also increased
during 2006 compared to 2005. Interest expense increased during 2006 compared to
2005 as a result of an increase in the average balance of money market accounts,
time deposit accounts and borrowings and an increase in the average rates paid
on all interest bearing liability accounts except savings deposits. However, the
increase in interest expense was offset by a decrease in the average balance of
savings accounts and NOW accounts.

     During 2007, the Bank used funds generated from FHLB borrowings to fund the
purchase of investment securities and the deposit account runoff. During 2006,
the Bank used funds generated from deposit account growth, sale of investment
securities and FHLB borrowings to fund loan commitments.

     The net interest margin is impacted by the change in the spread between
yields on earning assets and rates paid on interest bearing liabilities. Net
interest margin decreased from 2006 to 2007. See Table 2 - Distribution of
Assets, Liabilities and Shareholders' Equity; Interest Rates and Interest
Differential.


                                       17

<PAGE>

TABLE 2. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY; INTEREST
RATES AND INTEREST DIFFERENTIAL

<TABLE>
<CAPTION>
                                 DECEMBER 31, 2007              DECEMBER 31, 2006              DECEMBER 31, 2005
                           ----------------------------   ----------------------------   ----------------------------
                              YTD                            YTD                            YTD
                            AVERAGE     YTD      YIELD/    AVERAGE      YTD     YIELD/    AVERAGE      YTD     YIELD/
                            BALANCE   INTEREST    RATE     BALANCE   INTEREST    RATE     BALANCE   INTEREST    RATE
                           --------   --------   ------   --------   --------   ------   --------   --------   ------
                                                                  In thousands
<S>                        <C>        <C>        <C>      <C>        <C>        <C>      <C>        <C>        <C>
Interest earning assets:
   Federal funds sold      $    701    $    37    4.97%   $     27    $     1    4.87%   $     28    $     1    3.11%
   Securities:
      Taxable                45,820      2,192    4.78      44,674      2,116    4.74      43,245      1,898    4.39
      Tax-exempt (1)         11,100        386    5.27      11,298        390    5.23      12,092        410    5.14
   Loans (net of
      unearned
      interest) (2)
      (4) (5)               204,045     14,356    7.04     194,712     13,211    6.78     170,158     10,826    6.36
                           --------    -------    ----    --------    -------    ----    --------    -------    ----
Total interest
   earning assets (1)      $261,666    $16,971    6.49%   $250,711    $15,718    6.27%   $225,523    $13,135    5.82%
                           --------    -------    ----    --------    -------    ----    --------    -------    ----
Nonearning assets:
   Cash and due
      from banks           $  7,573                       $  9,170                       $  9,577
   Bank premises and
      equipment, net          6,249                          6,464                          6,455
   Other assets               5,688                          5,521                          4,635
   Allowance for
      loan losses            (2,171)                        (2,136)                        (1,956)
                           --------                       --------                       --------
Total assets               $279,005                       $269,730                       $244,234
                           ========                       ========                       ========
Interest bearing
   liabilities:
   Savings deposits        $ 25,335    $   119    0.47%   $ 30,586    $   153    0.50%   $ 32,340    $   162    0.50%
   Time deposits            122,639      5,632    4.59      99,950      3,791    3.79      87,977      2,391    2.72
   NOW accounts              31,534        772    2.45      42,720      1,189    2.78      43,790        908    2.07
   Money market
      accounts               13,252        287    2.17      10,905        158    1.45      10,101         91    0.90
   Borrowings                18,173        915    5.03      18,751        978    5.22       8,393        298    3.55
                           --------    -------    ----    --------    -------    ----    --------    -------    ----
Total interest
   bearing liabilities     $210,933    $ 7,725    3.66%   $202,912    $ 6,269    3.09%   $182,601    $ 3,850    2.11%
                           --------    -------    ----    --------    -------    ----    --------    -------    ----
Noninterest bearing
   liabilities:
   Demand deposits         $ 42,575                       $ 43,795                       $ 40,314
   Other liabilities          4,424                          3,207                          2,368
   Shareholders' equity      21,073                         19,816                         18,951
                           --------                       --------                       --------
Total liabilities and
   shareholders' equity    $279,005                       $269,730                       $244,234
                           ========                       ========                       ========
                                       -------                        -------                        -------
Net interest income (1)                $ 9,246                        $ 9,449                        $ 9,285
                                       =======                        =======                        =======
Net interest spread (3)                           2.83%                          3.18%                          3.71%
                                                  ====                           ====                           ====
Net interest income to
   average interest
   earning assets (1)                             3.53%                          3.77%                          4.12%
                                                  ====                           ====                           ====
</TABLE>

(1)  Yields are expressed on a tax equivalent basis using a 34% tax rate.

(2)  For the purpose of these computations, nonaccruing loans are included in
     the amounts of average loans outstanding.

(3)  Net interest spread is the difference between the weighted average yield on
     interest-earning assets and the weighted average cost of interest-bearing
     liabilities.

(4)  Interest income on loans excludes fees of $229,997 in 2007, $270,962 in
     2006 and $284,659 in 2005.

(5)  Interest income on loans includes fees of $86,770 in 2007, $99,722 in 2006
     and $68,484 in 2005 from the Business Manager Program, student loans and
     lease receivables.


                                       18

<PAGE>

     Table 3 sets forth a summary of the changes in interest earned and interest
expense detailing the amounts attributable to (i) changes in volume (change in
average volume times the prior year's average rate), (ii) changes in rate
(change in the average rate times the prior year's average volume). The changes
in rate/volume (change in the average volume times the change in the average
rate), had been allocated to the changes in volume and changes in rate in
proportion to the relationship of the absolute dollar amounts of the change in
each. During 2007, net interest income increased $68,000 due to changes in
volume and decreased $271,000 due to changes in interest rates. Also, net
interest income was affected by a $41,000 decrease in loan fees. In 2006, net
interest income increased $836,000 due to changes in volume and decreased
$672,000 due to changes in interest rates. Also, net interest income was
affected by a $14,000 decrease in loan fees.

TABLE 3. VOLUME AND RATE ANALYSIS OF CHANGES IN INTEREST INCOME

<TABLE>
<CAPTION>
(Taxable equivalent basis)        2007 OVER 2006            2006 OVER 2005
                             -----------------------   ------------------------
                              CHANGE DUE TO             CHANGE DUE TO
                             --------------    TOTAL   ---------------    TOTAL
                             VOLUME    RATE   CHANGE   VOLUME    RATE    CHANGE
                             ------   -----   ------   ------   ------   ------
                                                In thousands
<S>                          <C>      <C>     <C>      <C>      <C>      <C>
Interest earned on:
   Federal funds sold        $  32    $  --   $   32   $   --   $   --   $   --
   Taxable securities           53       17       70       62      156      218
   Tax-exempt securities        (8)       3       (5)     (31)      11      (20)
   Loans                       643      513    1,156    1,635      750    2,385
                             -----    -----   ------   ------   ------   ------
Total interest earned        $ 720    $ 533   $1,253   $1,666   $  917   $2,583
                             -----    -----   ------   ------   ------   ------
Interest expense on:
   Savings deposits          $ (24)   $  (9)  $  (33)  $   (9)  $   --   $   (9)
   Time deposits               954      887    1,841      361    1,039    1,400
   NOW accounts               (287)    (130)    (417)     (22)     303      281
   Money market accounts        39       91      130        8       59       67
   Other borrowing             (30)     (35)     (65)     492      188      680
                             -----    -----   ------   ------   ------   ------
Total interest expense       $ 652    $ 804   $1,456   $  830   $1,589   $2,419
                             -----    -----   ------   ------   ------   ------
Net interest income          $  68    $(271)  $ (203)  $  836   $ (672)  $  164
                             =====    =====   ======   ======   ======   ======
</TABLE>

     Another method of analyzing the change in net interest income is to examine
the changes between interest rate spread and the net interest margin on earning
assets. The interest rate spread as shown in Table 4 is the difference between
the average rate earned on earning assets and the average rate paid on interest
bearing liabilities. The net interest margin takes into account the benefit
derived from assets funded by interest free sources such as non-interest bearing
demand deposits and capital.


                                       19

<PAGE>

TABLE 4. INTEREST RATE SPREAD AND NET INTEREST MARGIN ON EARNING ASSETS

<TABLE>
<CAPTION>
(Taxable equivalent basis)           2007              2006              2005
                               ---------------   ---------------   ---------------
                                AVERAGE           AVERAGE           AVERAGE
                                BALANCE   RATE    BALANCE   RATE    BALANCE   RATE
                               --------   ----   --------   ----   --------   ----
                                                  In thousands
<S>                            <C>        <C>    <C>        <C>    <C>        <C>
Earning assets                 $261,666   6.49%  $250,711   6.27%  $225,523   5.82%
                               ========          ========          ========
Interest bearing liabilities   $210,933   3.66%  $202,912   3.09%  $182,601   2.11%
                                          ----              ----              ----
Interest rate spread                      2.83%             3.18%             3.71%
Interest free sources used
   to fund earning assets(1)     50,733   0.70%    47,799   0.59%    42,922   0.41%
                               --------   ----   --------   ----   --------   ----
Total sources of funds         $261,666          $250,711          $225,523
                               ========          ========          ========
Net interest margin                       3.53%             3.77%             4.12%
                                          ====              ====              ====
</TABLE>

(1)  Non-interest bearing liabilities and shareholders' equity less non-interest
     earning assets.

     The following discussion analyzes changes in the Bank's spreads and margins
in terms of basis points. A basis point is a unit of measure for interest rates
equal to .01%. One hundred basis points equals 1%.

     Interest rate spread decreased 35 basis points in 2007 and the net interest
margin decreased 24 basis points. The interest rate spread was negatively
impacted by a 57 basis point increase in interest bearing liability costs offset
by a 22 basis point increase in earning asset yields. Interest rate spread
decreased 53 basis points in 2006 while the net interest margin decreased 35
basis point. The interest rate spread was negatively impacted by an 98 basis
point increase in interest bearing liability costs offset by a 45 basis point
increase in earning asset yields.

     The prime rate remained stable until late in the third quarter of 2007 when
it began to decrease. At the end of the third quarter through the fourth quarter
of 2007, the prime rate decreased 100 basis points. During 2006, the prime rate
increased 100 basis points. Although, the prime rate moved by 100 basis points
in 2007 the impact of the decrease of the prime rate was lessened by the delay
of the movement. As a result, loan yields only increased 26 basis points in 2007
as compared to 42 basis points in 2006. Interest rates on deposit accounts and
other liabilities are tied to the shorter term rates such as the prime and
federal funds rate. In 2007, liability costs increased by 57 basis points due to
the stable interest rate environment during the first nine months and the lag
with which the Bank lowered their deposit rates after the decreases in the prime
rate. In 2007, the increase in liability costs is primarily the result of the
higher cost of funds on money market accounts and time deposits. In 2006, the
rates increased on all interest bearing liability accounts except savings
accounts which stayed level.

PROVISION FOR LOAN LOSSES

     The amount charged to the provision for loan losses is based on
Management's evaluation of the loan portfolio. Management determines the
adequacy of the allowance for loan losses based on past loan loss experience,
current economic conditions and composition of the loan portfolio. The allowance
for loan losses is the best estimate by Management of the probable losses which
have been incurred as of the balance sheet date. See Nonperforming Assets and
Allowance for Loan Losses for a comprehensive analysis.

NONINTEREST INCOME

     Noninterest income increased $378,000 or 18.7% during 2007 over 2006. The
increase in 2007 was a result of increases in overdraft account fees, debit card
fees and trust fee income, in addition, to a gain on sale of stock and gain on
sale of


                                       20

<PAGE>

loans. The increase in fees related to overdrafts and debit cards have a direct
correlation to the increased usage by account holders and the increased deposit
base of the Bank excluding the runoff of the one large prime rate deposit
account relationship. Another factor impacting noninterest income was an
increase in service charge fees relating to overdraft fees effective October 1,
2006. Trust fees increased due to the assets under management increasing to
$42.6 million, a 7.4% increase over the same period last year. Net gain on sales
of loans is new in 2007 due to CNB selling loans to secondary market investors.
For the year 2007, a gain of $87,000 was realized on these sales. In 2000, the
Bank received shares of stock from the demutualization of an insurance company
and sold the stock. The Bank was unaware of 1,644 shares which had been
erroneously issued in the name of a bank director. Immediately upon knowledge of
the existence of the stock, the bank took possession of the stock and sold it
realizing a $59,000 gain.

     Noninterest income for 2006 was relatively unchanged in total over the
prior comparable period. The line item fluctuations for 2006 compared to the
prior period are explained in detail. Noninterest income for 2006 was impacted
by the reporting of income for CNB Insurance Services, Inc. in discontinued
operations offset by increases in overdraft protection and overdraft fees, ATM
and debit card fees and trust fee income. These increases for 2006 were also
offset by a decrease in income from the title insurance company caused by a
decrease in the number of policies written during the period. The increase in
fees related to overdraft protection and overdraft fees, ATM and debit card fees
have a direct correlation to the increased deposit base of the bank. Also,
having a positive impact on noninterest income for 2006 was an increase in
service charge fees effective October 1, 2006. The increase in noninterest
income for 2005 was attributable to fees generated from the overdraft protection
program, debit card income, ATM fees and trust fees. These increases in 2005
were offset by a decrease in overdraft fees, travel club fees and miscellaneous
customer service fees.

     The level of trust assets being managed increased from $39.7 million at
December 31, 2006 to $42.6 million at December 31, 2007, a 7.4% increase and the
fees earned on these assets increased by $43,000 or 21.8%. The average level of
trust assets being managed increased by $3.8 million or 10.1%.

NONINTEREST EXPENSES

     Noninterest expenses increased $198,000 or 2.5% during 2007 over the prior
comparable period. Salaries increased due to normal merit increases and the
payment of bonuses totaling $36,000 and accrual of 2007 bonuses of $30,000 to
the top four executive officers. The Board of Directors decided to pay bonuses
in May 2007, and based the amounts in part on the Bank's 2006 performance.
Offsetting these increases was the Bank having three less full time equivalent
employees on staff, one of which was an executive officer during 2007. Other
employees who left the Bank's employment during this period were replaced at a
lower salary base. Additionally in 2006, CNB incurred $24,000 of expenses for a
severance package offered to and accepted by an employee. Employee benefits
showed a decrease over the same period last year due to a reduction in the
Bank's 401k match for 2007. These decreases were offset by an increase in the
pension expense.

     Occupancy expense increased due to the rising cost of property taxes and
utilities, minor building repairs, renovations and painting at the main office
and additional painting at one of the Bank's branch facilities. Furniture and
equipment expense showed an increase for 2007 as compared to 2006. This increase
was due to the increased cost and number of maintenance contracts the bank
carries on its equipment and increased depreciation on computer hardware offset
by a reduction in software amortization expense due to some items being fully
amortized. Also, equipment expense increased due to upgrades to LCD displays at
a few of the Bank's ATM machines and numerous repairs to other bank equipment.

     The increase in other operating expenses was due to increases in marketing
expense, ATM expense, debit card expense, professional service fees and debit
card losses. Marketing expense increased due to the cost of an outside agency
and additional modes of advertising the Bank is employing. Also, the Bank
launched a marketing campaign in 2007 to increase loan demand where the Bank
gave away $100 gift cards to customers closing a home equity loan. Approximately
$10,000 was expensed for this campaign. Even though the conversions to new
systems for the ATM and debit cards happened early in 2006 causing the expenses
in 2006 to be higher than normal, the ATM expense and debit card expense for
2007 exceeded the expense for the same period in 2006 due to the monthly expense
for these services being greater due to increased fees to the Bank in addition
to increased usage. Professional fees increased in 2007 due to the expenses
related to complying with Sarbanes-Oxley Act of 2002. Debit card losses
increased due to the Bank experiencing numerous point of sale fraud issues in
2007. These increases were offset by decreases related to stationery, supplies
and printing, examination fees expense, legal expenses and bad check and other
losses. Stationery, supplies and printing expense decreased in 2007 due to the
printing expenses related to the Bank's charter change from a national bank to a
state bank in 2006. Examination fees expense decreased due to the state bank
assessment fees being lower than the national bank assessment fees. Legal
expenses decreased as a direct result of the expenses incurred in 2006


                                       21

<PAGE>

with the Bank's charter change. Bad check and other losses decreased due to
numerous fraudulent check items the Bank dealt with during 2006.

     Additional offsetting decreases to noninterest expenses were a result of a
decrease in loss on sales of securities and loss on disposal of premises and
equipment in 2007 compared to 2006.

     Noninterest expenses increased $259,000 or 3.4% during 2006 over the prior
comparable period. The expenses related to the discontinued operations of CNB
Insurance Services, Inc. were reclassified out of noninterest expenses for 2006.
In 2005, CNB Insurance Services, Inc. noninterest expenses totaled $132,000 of
which $84,000 was for salaries, $20,000 for benefits and $28,000 was for other
operating expenses. These expenses totaled $73,000 in 2006 and are classified in
discontinued operations. Salaries increased due to normal merit increases and a
full year of salaries for the new Spring Mills branch employees. Additionally in
late January 2006, the Bank increased all hourly salaries to become more in line
with the area competition. Employee benefits increased due to an increase in
pension expense, an increase in health insurance costs and increased salaries.
Additionally in 2006, CNB incurred $24,000 of expenses for a severance package
offered to and accepted by an employee. Although the bank changed its health
insurance program, effective January 1, 2005, to a high deductible plan with
reduced per employee premiums, the insurance expense for 2006 showed an increase
over the same period last year due to the increased number of employees who were
eligible and elected to be in the plan and a normal increase in premiums.

     Occupancy expense increased due to the cost of needed building repairs at a
few of the branch buildings along with the added costs of depreciation and
building supplies for an additional branch facility in Spring Mills, West
Virginia. Furniture and equipment expense showed a decrease for 2006 as compared
to 2005. This decrease was due to a reduction in software amortization expense
due to items related to the computer conversion in 2003 being fully amortized in
February 2006 offset by the additional depreciation for equipment and software
purchased for the new branch facility in Spring Mills and the increased cost and
number of maintenance contracts the bank carries on its equipment.

     The increase in other operating expenses was due to increases in
advertising, stationery, supplies and printing, ATM fees, board fees and legal
fees. During the first quarter of 2006, the Bank increased its newspaper and
radio exposure showcasing the Bank's deposit products. This exposure was
significantly reduced during the remainder of 2006. Stationery, supplies and
printing increased due to the printing expenses related to the Bank's charter
change from a national bank to a state bank. The ATM expense increase was during
the first quarter and was a direct result of the one time conversion costs for a
new system. Board fees payable to directors increased in April 2006. Legal fees
increased due to expenses related to the Bank's charter change. These increases
were offset by decreases in postage, data processing, debit card expense,
outside service fees, teller shortages and miscellaneous NSF and other check
losses. Postage decreased due to the Bank's implementation of a new postage
system. Data processing expense decreased due to the start up costs of the
Spring Mills branch in 2005. Debit card expense decreased due to the Bank
converting to a new system for processing during the second quarter of 2006.
Professional service fees decreased due to expenses being charged in 2005 for
compliance with Sarbanes-Oxley Act of 2002. Teller shortages decreased due to
the bank robbery in 2005. Miscellaneous NSF and other check losses decreased due
to the Bank experiencing a larger than normal volume of fraudulent checks in
2005.

     The Company performs an annual test of impairment of acquired customer
lists. The annual test for impairment resulted in no loss for the years ended
December 31, 2007, 2006 or 2005. On June 1, 2006, the customer lists of CNB
Insurance Services, Inc. along with all other assets were sold to Maiden
Financial. See Note 16: Discontinued Operations in the Notes to Consolidated
Financial Statements for further discussion.

INCOME TAXES

     Provision for income tax totaled $1.2 million in 2007, $1.3 million in 2006
and $1.2 million in 2005. The effective tax rate was 32.3% in 2007 compared to
34.6% and 33.6% in 2006 and 2005, respectively. The Bank's income tax expense
differs from the amount computed at statutory rates primarily due to the
tax-exempt earnings from certain investment securities and loans, and
non-deductible expenses, such as life insurance premiums. See Note 14: Income
Taxes in the Notes to Consolidated Financial Statements for a comprehensive
analysis of income tax expense.

FINANCIAL CONDITION

     Table 5 examines CNB Bank, Inc.'s financial condition in terms of its
sources and uses of funds. Average funding sources and uses increased $11.0
million or 4.4% in 2007 compared with an increase of $25.2 million or 11.2% in
2006.


                                       22

<PAGE>

TABLE 5. SOURCES AND USES OF FUNDS

<TABLE>
<CAPTION>
                                      2007                           2006
                          ----------------------------    --------------------------
                                          INCREASE                       INCREASE
                                         (DECREASE)                     (DECREASE)        2005
                           AVERAGE   -----------------     AVERAGE   ---------------     AVERAGE
                           BALANCE    AMOUNT      %        BALANCE    AMOUNT     %       BALANCE
                          --------   -------   -------    --------   -------   -----    --------
                                                       In thousands
<S>                       <C>        <C>       <C>        <C>        <C>       <C>      <C>
Funding uses:
   Federal funds
      sold                $    701   $   674   2,496.3%   $     27   $    (1)   (3.6)%  $     28
   Securities available
      for sale              56,920       948       1.7      55,972       635     1.1      55,337
   Loans                   204,045     9,333       4.8     194,712    24,554    14.4     170,158
                          --------   -------              --------   -------            --------
   Total uses             $261,666   $10,955       4.4%   $250,711   $25,188    11.2%   $225,523
                          ========   =======   =======    ========   =======   =====    ========
Funding sources:
   Interest-bearing
      demand deposits     $ 44,786   $(8,839)    (16.5)%  $ 53,625   $  (266)   (0.5)%  $ 53,891
   Savings deposits         25,335    (5,251)    (17.2)     30,586    (1,754)   (5.4)     32,340
   Time deposits           122,639    22,689      22.7      99,950    11,973    13.6      87,977
   Short-term
      borrowings            18,173      (578)     (3.1)     18,751    10,358   123.4       8,393
   Noninterest bearing
      funds, net(1)         50,733     2,934       6.1      47,799     4,877    11.4      42,922
                          --------   -------              --------   -------            --------
   Total sources          $261,666   $10,955       4.4%   $250,711   $25,188    11.2%   $225,523
                          ========   =======   =======    ========   =======   =====    ========
</TABLE>

(1)  Noninterest bearing liabilities and shareholders' equity less noninterest
     earning assets.

     Total assets increased $14.3 million or 5.2% to $290.4 million from
December 31, 2006 to December 31, 2007 due primarily to a $15.1 million increase
in investment securities, a $871,000 increase in Federal Home Loan Bank stock
and a $432,000 increase in cash and due from banks offset by a $1.7 million
decrease in loans.

     Total liabilities increased $11.8 million or 4.6% to $267.6 million from
December 31, 2006 to December 31, 2007 substantially due to the increase in FHLB
borrowings of $19.0 million offset by a decrease in deposits of $6.4 million and
a decrease in accrued expenses and other liabilities of $923,000. Shareholders'
equity increased $2.5 million to $22.8 million at December 31, 2007 primarily
due to net income of $2.5 million and a $973,000 increase in accumulated other
comprehensive income offset by cash dividends of $770,000 and stock repurchases
of $207,000.

     The components of accumulated other comprehensive income at December 31,
2007, were unrealized gains and losses on available for sale securities, net of
deferred income taxes and unrecognized pension costs, net of deferred income
taxes. The increase in accumulated other comprehensive income was due to the
decrease in unrecognized pension costs and an increase in the unrealized market
value appreciation of the available for sale investment security portfolio. The
unrealized gains and losses are primarily a function of available market
interest rates relative to the yield being generated on the available for sale
portfolio. No earnings impact results, however, unless the securities are
actually sold. The additional minimum pension liability adjustment in 2005
resulted from the accumulated benefit obligation exceeding the fair value of
plan assets. In 2006, CNB implemented SFAS No. 158, "Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans" in which the unfunded
liability resulting from the projected benefit obligation exceeding the fair
value of the plan assets is recorded as a liability and any unrecognized pension
costs are recorded net of tax in accumulated other comprehensive income. See
Note 11: Pension Plan in the Notes to Consolidated Financial Statements for
further details.


                                       23
<PAGE>

LOAN PORTFOLIO

     At December 31, 2007, total loans decreased $1.7 million or .8% to $202.7
million from $204.3 million at December 31, 2006. Although, each category of
loans except commercial real estate loans experienced decreases, the loan mix
was unchanged from December 31, 2006. During 2007, the Bank offered an incentive
program to its customers to generate loan demand. This program generated
approximately $2.0 million in new home equity loan demand. Beginning in January
2007, the Bank began selling all fixed rate residential mortgage loans to
secondary market investors. During 2007, CNB originated and sold $5.4 million of
loans to secondary market investors. The bank continues to experience a slowdown
in the loan demand due to the slowdown in the housing market, even though
lending officers continue to be proactive in their marketing effort in the
bank's lending area. The Bank's lending area has seen a shift in the market
price on real property from price appreciation in 2006 to a flat or declining
market in 2007. During 2007, there was an announced closing of a large
manufacturing plant within the Bank's lending area causing approximately 300
consumers to seek other employment. This closing may negatively impact the
Bank's loan and demand deposit portfolio. The Bank's management believes the
slowdown in the housing market and the lower loan demand will continue
throughout 2008. The loan to deposit ratio was 89.3% at December 31, 2007 and
87.7% at December 31, 2006. The ratio of net charge-offs to average loans
outstanding was .08% in 2007 and .09% in 2006.

     Table 6 sets forth the amount of loans outstanding (net of unearned income)
as of the dates shown:

TABLE 6.  LOANS AND LEASES OUTSTANDING

<TABLE>
<CAPTION>
                                                DECEMBER 31,
                            ----------------------------------------------------
                              2007       2006       2005       2004       2003
                            --------   --------   --------   --------   --------
                                                In thousands
<S>                         <C>        <C>        <C>        <C>        <C>
Real estate                 $143,012   $143,767   $125,723   $108,159   $ 98,405
Commercial real estate        37,588     36,967     29,492     22,759     21,521
Consumer                      15,544     15,934     16,802     16,405     16,853
Commercial                     8,179      9,172      9,314      8,881      8,934
Overdrafts                       104        163        356         82        136
                            --------   --------   --------   --------   --------
                            $204,427   $206,003   $181,687   $156,286   $145,849
Leases                           113        124        145        166        186
                            --------   --------   --------   --------   --------
                            $204,540   $206,127   $181,832   $156,452   $146,035
Net deferred loan fees,
   premiums and discounts        273        324        397        275        238
Allowance for loan losses     (2,144)    (2,132)    (2,022)    (1,807)    (1,608)
                            --------   --------   --------   --------   --------
                            $202,669   $204,319   $180,207   $154,920   $144,665
                            ========   ========   ========   ========   ========
</TABLE>

     The commercial real estate loan portfolio showed an increase in outstanding
loans of $621,000 from $37.0 million at December 31, 2006 to $37.6 million at
December 31, 2007. The commercial real estate loan portfolio is approximately
18% of the total loan portfolio at December 31, 2007 and 2006. The Bank's
activity in the Berkeley County market continues to expand with the three branch
locations located in that area. The Bank's loan activity also increased in the
Maryland market after acquiring the Hancock, Maryland branch in June 2004. In
addition, the Bank's loan growth has benefited from significant real estate
development activity in Berkeley County, West Virginia. Management believes
additional growth in the commercial real estate area is possible in 2008 through
financing existing businesses and also the possible restart of housing
developments during the latter part of 2008.

     Real estate mortgage loans comprised mainly of one to four family
residences continued to be the Bank's dominant loan category. Mortgage lending
comprises approximately 70% of the total loan portfolio at December 31, 2007 and
2006 totaling


                                       24

<PAGE>

$143.0 million at December 31, 2007 and $143.8 million at December
31, 2006. Although the net decrease in real estate mortgage loans totaled
$754,000, actual real estate mortgage loan originations were higher as the Bank
sold all fixed rate mortgage loans originated to secondary market investors
beginning in January 2007. During 2007, CNB originated and sold $5.4 million of
loans to secondary market investors. The Bank's increased presence in Berkeley
County, West Virginia, and Washington County, Maryland continue to generate
additional activity in the real estate mortgage loan arena.

     The consumer loan portfolio showed a decrease of $389,000. A continuing
factor causing the decrease was the decline in the overall new and used car
sales which began in 2006 and continued throughout 2007. Also, the Bank
continued to experience a decrease in dealer vehicle loans which also began in
2006 due to local competition offering a lower rate and/or better loan terms. In
2007, the Bank offered a special home equity program. Customers took advantage
of this program by paying off their higher consumer debt by refinancing it
through a home equity loan. The Bank's primary consumer loan market area is
Morgan and Berkeley Counties, West Virginia and Washington County, Maryland
which are all considered to be conservative spending areas. With the recent
closing of one manufacturing plant and the announced closing of another,
consumers are hesitant to increase their household debt for unnecessary items
such as new vehicles or home improvements. Another factor impacting the consumer
loan portfolio change is a decrease of $59,000 in overdraft deposit accounts.

     Table 7 summarizes the approximate contractual maturity and sensitivity of
certain loan types to changes in interest rates as of December 31, 2007:

TABLE 7.  CONTRACTUAL MATURITY AND SENSITIVITY

<TABLE>
<CAPTION>
                                                         DECEMBER 31, 2007
                                          ----------------------------------------------
                                          ONE YEAR   ONE THROUGH      OVER
                                           OR LESS    FIVE YEARS   FIVE YEARS     TOTAL
                                          --------   -----------   ----------   -------
                                                           In thousands
<S>                                       <C>        <C>           <C>          <C>
Commercial, financial and agricultural:
   Floating rate                           $23,370     $11,380       $ 1,141    $ 35,891
   Fixed rate                                2,925       3,944         3,007       9,876
                                           -------     -------       -------    --------
      Total                                $26,295     $15,324       $ 4,148    $ 45,767
                                           =======     =======       =======    ========
Real estate - mortgage:
   Floating rate                           $ 9,206     $49,142       $    --    $ 58,348
   Fixed rate                                3,429       4,403        73,642      81,474
                                           -------     -------       -------    --------
      Total                                $12,635     $53,545       $73,642    $139,822
                                           =======     =======       =======    ========
Real estate - construction:
    Floating rate                          $ 2,527     $    --       $    --    $  2,527
    Fixed rate                                 663          --            --         663
                                           -------     -------       -------    --------
       Total                               $ 3,190     $    --       $    --    $  3,190
                                           =======     =======       =======    ========
Consumer:
   Floating rate                           $   151     $   126       $    --    $    277
   Fixed rate                                1,057      10,519         3,795      15,371
                                           -------     -------       -------    --------
      Total                                $ 1,208     $10,645       $ 3,795    $ 15,648
                                           =======     =======       =======    ========
Lease financing:
   Floating rate                           $    --     $    --       $    --    $     --
   Fixed rate                                    1          --           112         113
                                           -------     -------       -------    --------
      Total                                $     1     $    --       $   112    $    113
                                           =======     =======       =======    ========
</TABLE>


                                       25

<PAGE>

     The Bank has experienced customer demands for both variable rate loans and
fixed rate mortgage products. Demand for the variable rate loans has increased
during 2007 with the Bank selling all fixed rate mortgage loans to secondary
market investors. With the current declining interest rate environment, variable
rate loans are becoming more attractive than in the past. The Bank does continue
to see a demand for fixed rate products even though these products are sold to
secondary market investors. As of December 31, 2007, 53.4% of the Bank's
mortgage loans were adjustable rate loans and 46.6% were fixed rate loans.
Compared to December 31, 2006, 48.1% of the Bank's mortgage loans were
adjustable rate loans and 51.9% were fixed rate loans. Currently, the Bank has
approximately $1.9 million in fixed rate loans in the portfolio which were
originated under terms that would allow them to be sold on the secondary market,
although there is no intent to sell these loans.

NONPERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES

     Nonperforming loans consist of loans in nonaccrual status and loans which
are past due 90 days or more and still accruing interest. Bank policy requires
those loans which are past due 90 days or more be placed on nonaccrual status
unless they are both well secured and in the process of collection. As of
December 31, 2007 and 2006, nonaccrual loans approximated .54% and .20% of total
loans (net), respectively. At December 31, 2007, there are nine loans considered
to be impaired with a balance of $1.2 million (net of government agency
guarantees) and a specific allowance of $240,000. The Bank had no loans which
were considered to be impaired as of December 31, 2006. As of December 31, 2007,
management is aware of thirteen borrowers who have exhibited weaknesses. Their
loans have aggregate uninsured balances of $1.4 million. A specific allowance of
$100,000 has been established for these loans as part of the allowance for loan
losses. The loans are collateralized primarily by real estate and management
anticipates that any additional potential loss would be minimal.

     Table 8 sets forth the amounts of nonperforming assets as of the dates
indicated:

TABLE 8.  NONPERFORMING ASSETS

<TABLE>
<CAPTION>
                                                                     DECEMBER 31
                                                         ----------------------------------
                                                          2007    2006   2005   2004   2003
                                                         ------   ----   ----   ----   ----
                                                                    In thousands
<S>                                                      <C>      <C>    <C>    <C>    <C>
Foreclosed real estate (other real estate owned)         $  151   $ --   $ --   $ --   $ --
Impaired loans, not on nonaccrual                           848     --     --     --     --
Nonaccrual loans, impaired (1)                              562     --     --     --     --
Nonaccrual loans, not impaired                              552    402    790    381    349
Loans past due 90 days or more still accruing interest       --      5                   27
                                                         ------   ----   ----   ----   ----
   Total non-performing assets                           $2,113   $407   $790   $381   $376
                                                         ======   ====   ====   ====   ====
</TABLE>

(1)  Some of these loans have government agency guarantees reducing the bank's
     exposure by $261,592.

     The allowance for loan losses is the best estimate by management of the
probable losses which have been incurred as of the respective balance sheet
date. Management makes a determination quarterly by analyzing overall loan
quality, changes in the mix and size of the loan portfolio, previous loss
experience, general economic conditions, information about specific borrowers
and other factors. The Bank's methodology for determining the allowance for loan
losses establishes both an allocated and an unallocated component. The allocated
portion of the allowance represents the results of analyses of individual loans
that are being monitored for potential credit problems and pools of loans within
the portfolio. The allocated portion of the allowance for loans is based
principally on current loan risk ratings, historical loan loss rates adjusted to
reflect current conditions, as well as analyses of other factors that may have
affected the collectibility of loans in the portfolio. The Bank analyzes all
commercial loans that are being monitored as potential credit problems to
determine whether such loans are impaired, with impairment measured by reference
to the borrowers' collateral values and cash flows. The unallocated portion of
the allowance for loan losses represents the results of analyses that measure
probable losses inherent in the portfolio that are not adequately captured in
the allocated allowance analyses. These analyses include consideration of
unidentified losses inherent in the portfolio resulting from changing
underwriting criteria, changes in the types and mix of loans originated,
industry concentrations and evaluations, allowance levels relative to selected
overall credit criteria and other economic indicators used to estimate probable
incurred losses. At December 31, 2007 and 2006, the allowance for loan losses
totaled $2.1 million. The allowance for loan losses as a


                                       26

<PAGE>

percentage of loans was 1.1% and 1.0% as of December 31, 2007 and 2006,
respectively. The provision for loan losses exceeded net charge-offs by $12,000
and $110,000 in 2007 and 2006, respectively.

     Table 9 shows a summary of the Company's loan loss experience:

TABLE 9.  ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
                                              2007       2006       2005       2004        2003
                                            --------   --------   --------   --------   ---------
                                                                  In thousands
<S>                                         <C>        <C>        <C>        <C>        <C>
Loans outstanding at end of year            $204,540   $206,127   $181,832   $156,452    $146,035
                                            ========   ========   ========   ========    ========
Daily average balance of loans and leases   $204,045   $194,712   $170,158   $152,984    $136,658
                                            ========   ========   ========   ========    ========
Balance of allowance for loan losses
   at beginning of year                     $  2,132   $  2,022   $  1,807   $  1,608    $  1,484
                                            --------   --------   --------   --------    --------
Loans charged off:
   Commercial, financial and agricultural   $     --   $     20   $     --   $     41    $      7
   Real estate - mortgage                         20         --         --         --          --
   Consumer                                      320        298        306        311         262
                                            --------   --------   --------   --------    --------
   Total loans charged off                  $    340   $    318   $    306   $    352    $    269
                                            --------   --------   --------   --------    --------
Recoveries:
   Commercial, financial and agricultural   $      5   $     --   $      2   $      5    $      2
   Consumer                                      178        152        167        153          79
                                            --------   --------   --------   --------    --------
   Total recoveries                         $    183   $    152   $    169   $    158    $     81
                                            --------   --------   --------   --------    --------
   Net charge-offs                          $    157   $    166   $    137   $    194    $    188
                                            --------   --------   --------   --------    --------
Provision charged to expense                $    169   $    276   $    352   $    393    $    312
                                            --------   --------   --------   --------    --------
Balance, end of year                        $  2,144   $  2,132   $  2,022   $  1,807    $  1,608
                                            ========   ========   ========   ========    ========
SELECTED ASSET QUALITY RATIOS:
Net charge-offs to average loans                0.08%      0.09%      0.08%      0.13%       0.14%
Allowance for loan losses to loans
   outstanding at end of year                   1.05%      1.03%      1.11%      1.15%       1.10%
Non-performing assets (1) to total assets       0.73%      0.15%      0.31%      0.16%       0.19%
Non-accrual loans to total loans                0.54%      0.20%      0.43%      0.24%       0.24%
</TABLE>

(1)  Includes accruing loans past due 90 days or more, impaired loans and other
     real estate owned


                                       27

<PAGE>

     Table 10 summarizes the allocation of the allowance for loan losses by loan
type:

TABLE 10.  HISTORICAL ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                        -------------------------------------------------------------------------------------------------
                               2007                2006                2005                2004                2003
                        -----------------   -----------------   -----------------   -----------------   -----------------
                                   % OF                % OF                % OF                % OF                % OF
                                 LOANS IN            LOANS IN            LOANS IN            LOANS IN            LOANS IN
                                   EACH                EACH                EACH                EACH                EACH
                        AMOUNT   CATEGORY   AMOUNT   CATEGORY   AMOUNT   CATEGORY   AMOUNT   CATEGORY   AMOUNT   CATEGORY
                        ------   --------   ------   --------   ------   --------   ------   --------   ------   --------
<S>                     <C>      <C>        <C>      <C>        <C>      <C>        <C>      <C>        <C>      <C>
                                                                  In thousands

Commercial, financial
   and agriculture      $  886      22%     $1,231      22%     $1,056      21%     $  810     20%      $  782      21%
Real estate-
   construction and
   mortgages               479      69         508      70         528      69         467      69         401      67
Consumer, leasing
   and other               244       8         225       8         303      10         323      11         274      12
Impaired loans             255       1          --      --          --      --          --      --          --      --
Unallocated                280     N/A         168     N/A         135     N/A         207     N/A         151     N/A
                        ------     ---      ------     ---      ------     ---      ------     ---      ------     ---
      Total             $2,144     100%     $2,132     100%     $2,022     100%     $1,807     100%     $1,608     100%
                        ======     ===      ======     ===      ======     ===      ======     ===      ======     ===
</TABLE>

     The provision for loan losses is a charge to earnings which is made to
maintain the allowance for loan losses at a sufficient level. In 2007, 2006 and
2005, the provision totaled $169,000, $276,000 and $352,000, respectively.
Although, past due and nonaccrual loans have increased, they continue to be
minimal and loan quality remains good. Also, net charge offs as a percentage of
average loans decreased slightly from .09% in 2006 to .08% in 2007. The
reduction of the Bank's loan portfolio along with the reasons stated above,
caused management to decrease the provision for loan losses in 2007. In the
latter part of 2007, management began to see an increase in loan delinquencies
and therefore deemed $1.4 million of the loan portfolio impaired. The Bank's
lending area also continues to show signs of a slowdown in the housing market.
At the end of 2007, there was an announced closing of another large
manufacturing plant within the bank's lending area. This closing along with the
general slowdown in the markets has caused an increase in delinquencies.
Management anticipates this trend continuing into 2008, therefore, plans to
increase the provision for loan losses. In addition, federal and state
regulators may require additional reserves as a result of their examination of
the Bank. The allowance for loan losses reflects what management currently
believes is an adequate level of allowance, although there can be no assurance
that future losses will not exceed the estimated amounts, thereby adversely
affecting future results of operations.

SECURITIES PORTFOLIO AND FEDERAL FUNDS SOLD

     The Bank's securities portfolio consists of available for sale securities
and restricted investments. Classifying the securities portfolio as available
for sale provides management with increased ability to manage the balance sheet
structure and address asset/liability management issues when needed. The fair
value of the investment portfolio has increased $16.0 million to $68.6 million
at December 31, 2007 from December 31, 2006.

     The composition of the portfolio continues to reflect the Bank's
conservative philosophy which places greater importance on safety and liquidity
than on yield. At December 31, 2007, approximately 45.4% of the portfolio is
comprised of U.S. Government agencies and corporations, 34.1% in mortgage backed
securities and collateralized mortgage obligations, 16.7% in state and municipal
securities and 3.8% in restricted investments. As loan demand has slowed, the
percentage of the investment portfolio in mortgage backed securities and
collateralized mortgage obligations has increased significantly from 16.2% at
December 31, 2006 to 34.1% at December 31, 2007. The term to maturity is limited
to seven years for Treasury and Agency bonds and 10 years for Municipal bonds.
Typically, investments in Agency bonds contain a call feature. These bonds
generally have a somewhat higher yield. The average term to maturity of the
portfolio as of December 31, 2007 was 4.5 years.


                                       28

<PAGE>

     Table 11 sets forth the carrying amount of investment securities as of the
dates shown:

TABLE 11.  INVESTMENT SECURITIES

<TABLE>
<CAPTION>
                                                       DECEMBER 31
                                               ---------------------------
                                                 2007      2006      2005
                                               -------   -------   -------
                                                      In thousands
<S>                                            <C>       <C>       <C>
Available for sale:
   U.S. Government agencies and corporations   $31,170   $30,347   $34,235
   State and municipal securities               11,477    12,020    12,415
   Mortgage-backed securities                   14,139     7,104     8,544
   Collateralized mortgage obligations           9,231     1,402        --
Restricted securities                            2,624     1,753     1,809
                                               -------   -------   -------
      Total                                    $68,641   $52,626   $57,003
                                               =======   =======   =======
</TABLE>

     The Bank generally participates in the overnight federal funds sold market.
Depending upon specific investing or funding strategies and/or normal
fluctuations in loan and deposit balances, the Bank may need, on occasion, to
purchase funds on an overnight basis. The average balance in federal funds sold
increased from $27,000 in 2006 to $701,000 in 2007. The increased federal funds
sold average balance is a direct result of the Bank reducing it's borrowings in
the first half of 2007 from the excess of deposit growth over loan growth.

     See Note 3: Securities in the Notes to Consolidated Financial Statements
for a comprehensive analysis of the securities portfolio.

DEPOSITS AND OTHER FUNDING SOURCES

     Total deposits were $226.6 million at December 31, 2007, a decrease of $6.4
million or 2.8% over deposits at December 31, 2006. A significant factor in the
decrease of the Bank's interest-bearing demand deposits was the Bank's
unsuccessful bid during the second quarter of 2007 to retain a large public fund
deposit relationship. This deposit relationship carried a balance of $14.6
million at December 31, 2006. An additional factor in the decrease in all demand
deposit and savings accounts is caused by the continuing shift by customers of
their deposits from lower yielding accounts to higher yielding certificates of
deposits. In turn, this shift in deposits along with the competitive rates the
Bank has continued to offer on its certificates of deposit during 2007, have led
to an increase in the Bank's certificates of deposit.

     In our Washington County, Maryland market area, there have been a number of
bank mergers and CNB continues to benefit from these mergers with the increased
volume of new deposit accounts. The Bank's Washington County, Maryland branch
has grown $3.9 million in deposits since December 31, 2006.

     Average deposits showed a $7.4 million increase, or 3.2% growth, to $235.3
million in 2007. Deposits at the Hedgesville branch totaled $20.1 million at
December 31, 2007, an increase of $307,000 over December 31, 2006. Deposits at
the Martinsburg branch totaled $8.6 million at December 31, 2007, a decrease of
$15.2 million over December 31, 2006, which is the direct result of a decrease
of $14.6 million in the balances of the large public fund deposit account.
Deposits at the Spring Mills branch totaled $7.1 million at December 31, 2007,
an increase of $1.1 million over December 31, 2006.

     The Bank has continued to experience a change in the deposit account mix
during 2007. Noninterest-bearing deposits decreased only slightly by $61,000 or
..1%, during 2007. At December 31, 2007, noninterest-bearing deposits represented
18.8% of total deposits, compared to 18.3% for 2006. Average noninterest-bearing
deposits decreased 2.8% from $43.8 million in 2006 to $42.6 million in 2007. The
decline in noninterest-bearing deposits is attributable to a substantial
decrease in the third quarter of 2007 offset by increases in every other quarter
during 2007. This decrease was a result of several large business customers
experiencing cash flow decreases.

     Interest-bearing deposits decreased by $6.4 million or 3.4% to $184.0
million at December 31, 2007. Interest-bearing checking deposits decreased by
$17.3 million in 2007, while, the average interest-bearing checking deposits
decreased only $8.8


                                       29

<PAGE>

million. Included in this category are NOW accounts and Money Market accounts.
The Bank's deposit runoff is primarily due to the loss of deposit relationship
of one large public fund depositor. The lower average balance in deposits is due
to the loss of the deposit relationship of the large public fund depositor which
happened in the third quarter of 2007. While the average savings deposits
decreased $5.3 million or 17.2% to $25.3 million in 2007, actual savings
accounts decreased $4.1 million at December 31, 2007 to $23.5 million. The
decreases in the average savings deposits and the actual savings deposits are
due to the consistent runoff of savings accounts throughout the year of 2007 due
to depositors investing in certificates of deposit carrying attractive rates and
also depositors experiencing decreased personal cash flow.

     The Bank's largest source of interest-bearing funds is certificates of
deposit. These accounts totaled $125.2 million at December 31, 2007, an increase
of $15.0 million or 13.6%. This substantial increase is primarily due to
customers shifting their deposit dollars from interest bearing checking and
savings accounts to higher interest bearing certificates of deposit. The
increase in the Bank's certificates of deposit accounts is attributable to
increases the first three quarters of 2007 offset by a decrease in the last
quarter of 2007. During the last quarter of 2007, the Bank experienced a slight
runoff in these accounts due to the competition offering more attractive rates.
The average time deposits increased $22.7 million or 22.7% to $122.6 million in
2007. The difference between the increases in average time deposits and actual
time deposits is due to the runoff in certificates of deposit which took place
in the fourth quarter of 2007. The Bank featured one certificate of deposit
throughout 2007 and in the last quarter of 2007 there was an additional focus on
short term certificates of deposit with 91 day and 6 month terms. The featured
certificate of deposit throughout 2007 was the 14 month nonrenewable Certificate
of Deposit. Although no deposits may be made to this CD, this CD offered
attractive rates and became the certificate of choice for bank customers.

     Table 12 is a summary of the maturity distribution of certificates of
deposit in amounts of $100,000 or more as of December 31, 2007:

TABLE 12. MATURITY OF TIME DEPOSITS OF $100,000 OR MORE

<TABLE>
<CAPTION>
                             AMOUNT    PERCENT
                            --------   -------
                               In thousands
<S>                         <C>         <C>
Three months or less        $ 12,553    28.2%
Three through six months       6,649    15.0
Six through twelve months     11,043    24.8
Over twelve months            14,249    32.0
                            --------   -----
   Total                    $ 44,494     100%
                            ========   =====
</TABLE>


                                       30
<PAGE>

CONTRACTUAL OBLIGATIONS

     Table 13 shows the Bank's significant contractual obligations as of
December 31, 2007:

TABLE 13. CONTRACTUAL OBLIGATIONS

                             PAYMENTS DUE BY PERIOD

<TABLE>
<CAPTION>
                                                           LESS THAN                            MORE THAN
                                                 TOTAL       1 YEAR    1-3 YEARS   4-5 YEARS     5 YEARS
                                              ----------   ---------   ---------   ---------   ----------
<S>                                           <C>          <C>         <C>         <C>         <C>
Purchase obligations                          $   16,977   $16,977     $     --     $     --   $       --
Other long-term liabilities
   reflected on the registrant's
   balance sheet under GAAP
      Supplemental retirement liability (1)      137,349         --      41,563       52,500       43,286
      Pension liability                          917,414         --          --           --      917,414
      401k liability                              34,935     34,935          --           --           --
      Deferred compensation                      953,785      2,607       2,173           --      949,005
      Post retirement liability (1)              192,581     32,728      59,163       50,457       50,233
                                              ----------    -------    --------     --------   ----------
Total contractual obligations                 $2,253,041    $87,247    $102,899     $102,957   $1,959,938
                                              ==========    =======    ========     ========   ==========
</TABLE>

(1)  These amounts represent the net present value of cash flow payments at
     December 31, 2007.

CAPITAL RESOURCES

     The Bank remains well capitalized. Total shareholders' equity at December
31, 2007 of $22.8 million represents 7.9% of total assets. This compares to
$20.3 million or 7.4% at December 31, 2006. Included in capital at December 31,
2006 is $10,000 of unrealized losses on available for sale securities and
$738,000 unrecognized pension costs, both net of deferred income taxes. At
December 31, 2006, the Bank had unrealized losses on available for sale
securities of $655,000 and $1.1 million unrecognized pension costs, both net of
deferred income taxes. Such unrealized gains and losses on the investment
portfolio are recorded net of related deferred taxes and are primarily a
function of available market interest rates relative to the yield being
generated on the available for sale portfolio. No earnings impact will result,
however, unless the securities are actually sold.

     The Federal Reserve's risk-based capital guidelines provide for the
relative weighting of both on-balance-sheet and off-balance-sheet items based on
their degree of risk. The Bank continues to exceed all regulatory capital
requirements, and is unaware of any trends or uncertainties, nor do any plans
exist, which may materially impair or alter its capital position.


                                       31

<PAGE>

RETURN ON EQUITY AND ASSETS

     Table 14 shows consolidated operating and capital ratios for the periods
indicated:

TABLE 14. OPERATING AND CAPITAL RATIOS

<TABLE>
<CAPTION>
                                         YEARS ENDED DECEMBER 31,
                                         ------------------------
                                               2007    2006
                                              -----   -----
<S>                                      <C>          <C>
Return on average assets                        .90%    .92%
Return on average equity                      11.88   12.46
Dividend payout ratio                         30.76   28.57
Average equity to average assets ratio         7.55    7.35
</TABLE>

LIQUIDITY AND INTEREST RATE SENSITIVITY

     The objective of the Bank's liquidity management program is to ensure the
continuous availability of funds to meet the withdrawal demands of depositors
and the credit needs of borrowers. The basis of the Bank's liquidity comes from
the stability of its core deposits. Liquidity is also available through the
available for sale securities portfolio and short-term funds such as federal
funds sold. At December 31, 2007, these sources totaled $66.0 million, or 22.7%
of total assets. In addition, liquidity may be generated through loan
repayments, over $9.5 million of available borrowing arrangements with
correspondent banks and available collateralized borrowings from the Federal
Home Loan Bank. At December 31, 2007, management considered the Bank's ability
to satisfy its anticipated liquidity needs over the next twelve months.
Management believes that the Bank is well positioned and has ample liquidity to
satisfy these needs. The Bank generated $3.0 million of cash from operations in
2007, which compares to $3.6 million in 2006 and $4.1 million in 2005.
Additional cash of $11.6 million, $13.8 million and $19.9 million was generated
through net financing activities in 2007, 2006 and 2005, respectively. These
proceeds along with proceeds from the sales and maturities of investment
securities were used to fund loans and purchase securities during each year. Net
cash used in investing activities totaled $14.1 million in 2007 compared to
$20.1 million in 2006 and $24.0 million in 2005. Details on both the sources and
uses of cash are presented in the Consolidated Statements of Cash Flows
contained in the financial statements.

     The objective of the Bank's interest rate sensitivity management program,
also known as asset/liability management, is to maximize net interest income
while minimizing the risk of adverse effects from changing interest rates. This
is done by controlling the mix and maturities of interest-sensitive assets and
liabilities. The Bank has established an asset/liability committee for this
purpose. Daily management of the Bank's sensitivity of earnings to changes in
interest rates within the Bank's policy guidelines are monitored by using a
combination of off-balance sheet and on-balance sheet financial instruments. The
Bank's Chief Executive Officer, Chief Lending Officer, Chief Financial Officer
and the Chief Operations Officer monitor day to day deposit flows, lending
requirements and the competitive environment. Rate changes occur within policy
guidelines if necessary to minimize adverse effects. Also, the Bank's policy is
intended to ensure that the Bank measures a range of rate scenarios and patterns
of rate movements that are reasonably possible.

     One common interest rate risk measure is the gap, or the difference between
rate sensitive assets and rate sensitive liabilities. A positive gap occurs when
rate-sensitive assets exceed rate-sensitive liabilities. This tends to be
beneficial in rising interest rate environments. A negative gap refers to the
opposite situation and tends to be beneficial in declining interest rate
environments. However, the gap does not consider future changes in the volume of
rate sensitive assets or liabilities or the possibility that interest rates of
various products may not change by the same amount or at the same time. In
addition, certain assumptions must be made in constructing the gap. For example,
the Bank considers administered rate deposits, such as savings accounts, to be
immediately rate sensitive although their actual rate sensitivity could differ
from this assumption. The Bank monitors its gap on a quarterly basis.


                                       32

<PAGE>

TABLE 15. INTEREST SENSITIVITY ANALYSIS

<TABLE>
<CAPTION>
                                                                      DECEMBER 31, 2007
                                                                 INTEREST SENSITIVITY PERIOD
                                          -------------------------------------------------------------------------
                                            2008       2009      2010       2011      2012    THEREAFTER     TOTAL    FAIR VALUE
                                          --------   -------   -------    -------   -------    -------     --------   ----------
                                                                               In thousands
<S>                                       <C>        <C>       <C>        <C>       <C>       <C>          <C>        <C>
Rate sensitive assets
Loans, net of unearned interest           $ 86,138   $19,775   $19,906    $13,302   $13,785    $49,607     $202,513    $204,293
   Average interest rate                      7.18%     6.99%     7.01%      7.25%     7.23%      6.97%        7.12%
Securities                                  22,317     3,954     4,268      5,005     5,021     25,452       66,017      66,017
   Average interest rate                      5.22%     5.35%     5.29%      5.23%     5.15%      5.48%        5.32%
                                          --------   -------   -------    -------   -------    -------     --------
   Total interest sensitive assets        $108,455   $23,729   $24,174    $18,307   $18,806    $75,059     $268,530
                                          ========   =======   =======    =======   =======    =======     ========
Interest sensitive liabilities
Non-interest-bearing deposits             $  4,269   $ 4,269   $ 4,269    $ 4,269   $ 4,269    $21,345       42,691    $ 42,691
   Average interest rate                        --%       --%       --%        --%       --%        --%          --%
Savings and interest-bearing checking        5,874     5,874     5,874      5,874     5,874     29,370       58,741      58,741
   Average interest rate                      0.42%     0.42%     0.42%     0.42%     0.42%       0.42%        0.42%
Time deposits                               79,884    12,306    21,446      6,066     5,511         --      125,213     131,298
   Average interest rate                      4.84%     4.07%     4.40%      4.47%     4.62%        --%        4.65%
                                          --------   -------   -------    -------   -------    -------     --------
   Total interest sensitive liabilities   $ 90,027   $22,449   $31,589    $16,209   $15,654    $50,715     $226,644
                                          ========   =======   =======    =======   =======    =======     ========
GAP                                       $ 18,428   $ 1,280   $(7,415)   $ 2,098   $ 3,152    $24,344
Cumulative GAP                            $ 18,428   $19,708   $12,293    $14,390   $17,542    $41,886

GAP to sensitive assets ratio                 6.86%     0.48%    (2.76)%     0.78%     1.17%      9.07%
Cumulative GAP to sensitive
   assets ratio                               6.86%     7.34%     4.58%      5.36%     6.53%     15.60%
GAP to total assets ratio                     6.35%     0.44%    (2.55)%     0.72%     1.09%      8.38%
Cumulative GAP to total assets ratio          6.35%     6.79%     4.23%      4.96%     6.04%     14.42%
</TABLE>

IMPACT OF INFLATION

     The results of operations and financial position of the Bank have been
presented based on historical cost, unadjusted for the effects of inflation,
except for the recording of unrealized gains and losses on securities available
for sale. Inflation could significantly impact the value of the Bank's interest
rate-sensitive assets and liabilities and the cost of noninterest expenses, such
as salaries, benefits and other operating expenses. Management of the money
supply by the Federal Reserve to control the rate of inflation may have an
impact on the earnings of the Bank. Further, changes in interest rates to
control inflation may have a corresponding impact on the ability of certain
borrowers to repay loans granted by the Bank.

     As a financial intermediary, the Bank holds a high percentage of interest
rate-sensitive assets and liabilities. Consequently, the estimated fair value of
a significant portion of the Bank's assets and liabilities change more
frequently than those of non-banking entities. The Bank's policies attempt to
structure its mix of financial instruments and manage its interest rate
sensitivity in order to minimize the potential adverse effects of market forces
on its net interest income, earnings and capital.

     A comparison of the carrying value of the Bank's financial instruments to
their estimated fair value as of December 31, 2007 and December 31, 2006 is
disclosed in Note 22 of the Notes to the Consolidated Financial Statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Interest Rate Sensitivity" in Item 7
hereof.


                                       33

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The following audited consolidated financial statements are set forth in
this Annual Report of Form 10-K on the following pages:

<TABLE>
<S>                                                                           <C>
CNB Financial Services, Inc. and Subsidiary
Management's Report on Internal Control....................................   35
Independent Registered Public Accounting Firm Report.......................   36
Consolidated Balance Sheets................................................   37
Consolidated Statements of Income..........................................   38
Consolidated Statements of Stockholders' Equity............................   39
Consolidated Statements of Cash Flows......................................   40
Notes to Consolidated Financial Statements.................................   41
</TABLE>


                                       34

<PAGE>

                     MANAGEMENT'S REPORT ON INTERNAL CONTROL

To Our Shareholders
CNB Financial Services, Inc.
Berkeley Springs, West Virginia

          The management of CNB Financial Services, Inc. (CNB) and its
wholly-owned subsidiary has the responsibility for establishing and maintaining
an adequate internal control structure and procedures for financial reporting.
Management maintains a comprehensive system of internal control to provide
reasonable assurance of the proper authorization of transactions, the
safeguarding of assets and the reliability of the financial records. The system
of internal control provides for appropriate division of responsibility and is
documented by written policies and procedures that are communicated to
employees. CNB and its wholly-owned subsidiary maintain an internal auditing
program, under the supervision of the Audit Committee of the Board of Directors,
which independently assesses the effectiveness of the system of internal control
and recommends possible improvements.

          Under the supervision and with the participation of the Corporation's
management, including its Chief Executive Officer and Chief Financial Officer,
the Corporation has evaluated the effectiveness of its internal control over
financial reporting as of December 31, 2007, using the Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based upon this evaluation, the Chief Executive
Officer and the Chief Financial Officer have concluded that the Corporation's
disclosure controls and procedures are adequate and effective to ensure that
material information relating to the Corporation and its consolidated
subsidiaries is made known to them by others within those entities. The Chief
Executive Officer and the Chief Financial Officer believe that at December 31,
2007, CNB Financial Services, Inc. and its wholly-owned subsidiary maintained an
effective system of internal control over financial reporting.

          This annual report does not include an attestation report of the
Company's registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by the
Company's registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management's report in this annual report.


/s/ Thomas F. Rokisky                   /s/ Rebecca S. Stotler

Thomas F. Rokisky                       Rebecca S. Stotler
President and Chief Executive Officer   Sr. Vice President and Chief Financial
                                        Officer

February 25, 2008


                                       35

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors
CNB Financial Services, Inc.
Berkeley Springs, West Virginia

          We have audited the accompanying consolidated statements of financial
condition of CNB Financial Services, Inc. and subsidiary as of December 31, 2007
and 2006, and the related consolidated statements of income, changes in
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 2007. These financial statements are the responsibility of
CNB Financial Services, Inc.'s management. Our responsibility is to express an
opinion on these financial statements based on our audits.

          We conducted our audits in accordance with standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. CNB Financial Services,
Inc. is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

          In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of CNB
Financial Services, Inc. and subsidiary as of December 31, 2007 and 2006, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2007 in conformity with accounting principles
generally accepted in the United States of America.

          As described in Notes 1 and 11 to the financial statements, CNB
Financial Services, Inc. changed its method of accounting for its pension plan
in 2006 as required by the provisions of Statement of Financial Accounting
Standard No. 158.


                                        /s/ SMITH ELLIOTT KEARNS & COMPANY, LLC

Hagerstown, Maryland
February 25, 2008


                                       36

<PAGE>

                   CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                           DECEMBER 31, 2007 AND 2006

<TABLE>
<CAPTION>
                                                                       2007           2006
                                                                   ------------   ------------
<S>                                                                <C>            <C>
ASSETS
   Cash and due from banks                                         $  7,791,093   $  7,358,773
   Federal funds sold                                                        --          9,000
   Securities available for sale
      (at approximate market value)                                  66,017,231     50,873,335
   Federal Home Loan Bank stock, at cost                              2,623,600      1,753,000
   Loans and leases receivable, net                                 202,668,845    204,318,993
   Accrued interest receivable                                        1,406,804      1,354,041
   Foreclosed real estate (held for sale), net                          150,845             --
   Premises and equipment, net                                        6,111,273      6,327,294
   Deferred income taxes                                                927,843      1,482,166
   Cash surrender value of life insurance                             1,491,093      1,394,521
   Intangible assets                                                    385,661        497,178
   Other assets                                                         841,156        700,240
                                                                   ------------   ------------
      TOTAL ASSETS                                                 $290,415,444   $276,068,541
                                                                   ============   ============

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
   Deposits:
      Demand                                                       $ 42,690,898   $ 42,751,409
      Interest-bearing demand                                        35,278,551     52,549,478
      Savings                                                        23,462,625     27,548,990
      Time, $100,000 and over                                        44,493,979     37,760,199
      Other time                                                     80,718,661     72,472,664
                                                                   ------------   ------------
                                                                   $226,644,714   $233,082,740
   Accrued interest payable                                           1,281,166      1,071,990
   FHLB borrowings                                                   37,500,000     18,500,000
   Accrued expenses and other liabilities                             2,168,119      3,091,549
                                                                   ------------   ------------
      TOTAL LIABILITIES                                            $267,593,999   $255,746,279
                                                                   ------------   ------------

SHAREHOLDERS' EQUITY
   Common stock, $1 par value; 5,000,000 shares
      authorized; 458,048 shares issued at December 31, 2007 and
      December 31, 2006 and 454,949 and 458,048 outstanding at
      December 31, 2007 and December 31, 2006                      $    458,048   $    458,048
   Capital surplus                                                    4,163,592      4,163,592
   Retained earnings                                                 19,155,244     17,421,402
   Accumulated other comprehensive income (loss)                       (747,806)    (1,720,780)
                                                                   ------------   ------------
                                                                   $ 23,029,078   $ 20,322,262
   Less treasury stock, at cost, 3,099 shares in 2007                  (207,633)            --
                                                                   ------------   ------------
      TOTAL SHAREHOLDERS' EQUITY                                   $ 22,821,445   $ 20,322,262
                                                                   ------------   ------------
      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $290,415,444   $276,068,541
                                                                   ============   ============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.


                                       37

<PAGE>

                   CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005

<TABLE>
<CAPTION>
                                                           2007          2006          2005
                                                       -----------   -----------   -----------
<S>                                                    <C>           <C>           <C>
INTEREST INCOME
   Interest and fees on loans                          $14,585,845   $13,481,504   $11,110,517
   Interest and dividends on securities:
      U.S. Government agencies and
         corporations                                    1,372,612     1,560,210     1,489,230
      Mortgage backed securities                           708,398       441,166       358,302
      State and political subdivisions                     398,255       403,097       417,242
      Dividend income                                       93,883        81,663        40,212
   Interest on FHLB deposits                                 5,489        20,396         3,988
   Interest on federal funds sold                           36,921         1,317           797
                                                       -----------   -----------   -----------
                                                       $17,201,403   $15,989,353   $13,420,288
                                                       -----------   -----------   -----------
INTEREST EXPENSE
   Interest on interest bearing demand,
      savings and time deposits                        $ 6,809,967   $ 5,290,613   $ 3,551,774
   Interest on FHLB borrowings                             915,241       978,243       298,287
                                                       -----------   -----------   -----------
                                                       $ 7,725,208   $ 6,268,856   $ 3,850,061
                                                       -----------   -----------   -----------
         NET INTEREST INCOME                           $ 9,476,195   $ 9,720,497   $ 9,570,227
PROVISION FOR LOAN LOSSES                                  168,999       275,500       352,000
                                                       -----------   -----------   -----------
         NET INTEREST INCOME AFTER
            PROVISION FOR LOAN LOSSES                  $ 9,307,196   $ 9,444,997   $ 9,218,227
                                                       -----------   -----------   -----------
NONINTEREST INCOME
   Service charges on deposit accounts                 $ 1,389,868   $ 1,273,409   $ 1,227,521
   Other service charges and fees                          541,753       470,101       391,099
   Trust fee income                                        242,831       199,348       174,900
   Insurance income                                             --            --       142,523
   Other operating income                                  129,322        61,360        59,224
   Net gain on sales of loans                               86,871            --            --
   Income from title company                                12,023        20,668        27,924
                                                       -----------   -----------   -----------
                                                       $ 2,402,668   $ 2,024,886   $ 2,023,191
                                                       -----------   -----------   -----------
NONINTEREST EXPENSES
   Salaries                                            $ 3,080,315   $ 3,065,040   $ 3,061,375
   Employee benefits                                     1,241,633     1,258,295     1,092,788
   Occupancy of premises                                   521,962       509,945       436,247
   Furniture and equipment expense                         850,208       812,216       891,768
   Other operating expenses                              2,318,236     2,114,276     2,059,080
   Net (gain) loss on disposal of fixed assets                (225)       19,756            --
   Net loss on sale of securities                            2,688        37,271        16,165
                                                       -----------   -----------   -----------
                                                       $ 8,014,817   $ 7,816,799   $ 7,557,423
                                                       -----------   -----------   -----------
         INCOME BEFORE INCOME TAXES                    $ 3,695,047   $ 3,653,084   $ 3,683,995
PROVISION FOR INCOME TAXES                               1,190,791     1,263,126     1,238,416
                                                       -----------   -----------   -----------
         INCOME FROM CONTINUING OPERATIONS             $ 2,504,256   $ 2,389,958   $ 2,445,579
                                                       -----------   -----------   -----------
            NET RESULTS FROM DISCONTINUED OPERATIONS
               OF CNB INSURANCE SERVICES, INC
               BEFORE INCOME TAXES                     $        --   $   124,157   $        --
PROVISION FOR INCOME TAXES                             $        --   $    45,453   $        --
                                                       -----------   -----------   -----------
            NET RESULTS OF DISCONTINUED OPERATIONS     $        --   $    78,704   $        --
                                                       -----------   -----------   -----------
            NET INCOME                                 $ 2,504,256   $ 2,468,662   $ 2,445,579
                                                       ===========   ===========   ===========
BASIC EARNINGS PER SHARE                               $      5.48   $      5.39   $      5.34
                                                       ===========   ===========   ===========
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.


                                       38

<PAGE>

                   CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                                                      ACCUMULATED
                                                                                                         OTHER           TOTAL
                                                   COMMON      TREASURY     CAPITAL      RETAINED    COMPREHENSIVE   SHAREHOLDERS'
                                                    STOCK       STOCK       SURPLUS      EARNINGS    INCOME (LOSS)        EQUITY
                                                 ----------   ---------   ----------   -----------   -------------   ------------
<S>                                              <C>          <C>         <C>          <C>           <C>             <C>
BALANCE, DECEMBER 31, 2004                       $  458,048   $      --   $3,863,592   $14,172,144    $  (345,044)   $18,148,740
                                                                                                                     ------------
Comprehensive income:
   Net income for 2005                                   --                       --     2,445,579             --      2,445,579
   Transfer to capital surplus                           --          --      300,000      (300,000)            --             --
Change in unrealized gains
   (losses) on securities available
   for sale (net of tax of $432,965)                     --          --           --            --       (706,418)      (706,418)
Change in minimum pension liability
   adjustment (net of tax of $135,005)                   --          --           --            --       (220,271)      (220,271)
                                                                                                                     ------------
Total Comprehensive Income                                                                                             1,518,890
                                                                                                                     ------------
Cash dividends ($1.44 per share)                         --   $      --           --      (659,589)            --       (659,589)
                                                 ----------   ---------   ----------   -----------    -----------    -----------
BALANCE, DECEMBER 31, 2005                       $  458,048   $      --   $4,163,592   $15,658,134    $(1,271,733)   $19,008,041
                                                                                                                     ------------
Comprehensive income:
   Net income for 2006                                   --                       --     2,468,662             --      2,468,662
Change in unrealized gains                                           --
   (losses) on securities available
   for sale (net of tax of $61,559)                      --                       --            --        100,439        100,439
Change in minimum pension liability                                  --
   adjustment (net of tax of $46,688)                    --                       --            --         76,175         76,175
                                                                                                                     ------------
Total Comprehensive Income                                                                                             2,645,276
                                                                                                                     ------------
Adjustment to initially apply FASB
   Statement No. 158, (net of tax of $383,469)           --          --           --            --       (625,661)      (625,661)
Cash dividends ($1.54 per share)                         --          --           --      (705,394)            --       (705,394)
                                                 ----------   ---------   ----------   -----------    -----------    -----------
BALANCE, DECEMBER 31, 2006                       $  458,048   $      --   $4,163,592   $17,421,402    $(1,720,780)   $20,322,262
                                                                                                                     ------------
Comprehensive income:
   Net income for 2007                                   --          --           --     2,504,256             --      2,504,256
Change in unrealized gains
   (losses) on securities available
   for sale (net of tax of $395,359)                     --          --           --            --        645,060        645,060
Change in unfunded pension liability
   (net of tax of $200,979)                              --          --           --            --        327,914        327,914
                                                                                                                     ------------
Total Comprehensive Income                                                                                             3,477,230
                                                                                                                     ------------
Acquisition of treasury stock, at cost,
   3,099 shares                                          --    (207,633)          --            --             --       (207,633)
Cash dividends ($1.69 per share)                         --          --           --      (770,414)            --       (770,414)
                                                 ----------   ---------   ----------   -----------    -----------    -----------
BALANCE, DECEMBER 31, 2007                       $  458,048   $(207,633)  $4,163,592   $19,155,244    $  (747,806)   $22,821,445
                                                 ==========   =========   ==========   ===========    ===========    ===========
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.


                                       39
<PAGE>

                  CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                          2007           2006           2005
                                                                      ------------   ------------   ------------
<S>                                                                   <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                            $  2,504,256   $  2,468,662   $  2,445,579
Adjustments to reconcile net income to net cash
   provided by operating activities:
   Depreciation and amortization                                           691,278        709,304        833,406
   Provision for loan losses                                               168,999        275,500        352,000
   Deferred income taxes                                                   (42,015)       (47,349)       (79,401)
   Net loss on sale of securities                                            2,688         37,271         16,165
   (Gain) loss on disposal of fixed assets                                    (225)        19,756             --
   Net (gain) on loans sold                                                (86,871)            --             --
   Loans originated for sale                                            (5,314,950)            --             --
   Proceeds from loans sold                                              5,401,821             --             --
   (Gain) on sale of assets of CNB Insurance Services, Inc.                     --       (143,913)            --
   (Gain) on sale of stock                                                 (59,369)            --             --
   (Increase) in accrued interest receivable                               (52,763)      (123,264)      (188,204)
   (Increase) decrease in other assets                                     (86,477)      (131,488)       562,856
   Increase in accrued interest payable                                    209,176        460,478         67,961
   (Increase) in cash surrender value on life insurance in excess
      of premiums paid                                                     (38,138)       (56,009)       (51,946)
   Increase (decrease) in accrued expenses and other liabilities          (394,537)        58,413         31,265
   Amortization of deferred loan (fees) cost                                82,770         60,439         64,778
   Amortization (accretion) of premium and discount on investments          13,254         15,803         63,184
                                                                      ------------   ------------   ------------
      NET CASH PROVIDED BY OPERATING ACTIVITIES                       $  2,998,897   $  3,603,603   $  4,117,643
                                                                      ------------   ------------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Net (increase) decrease in loans                                      1,252,722    (24,447,542)   (25,704,586)
   Proceeds from sales of securities                                     3,796,972     12,218,693     37,026,097
   Proceeds from maturities, repayments and calls of securities          4,250,091      2,675,837      2,711,425
   Purchases of securities                                             (22,177,257)   (10,464,725)   (36,410,179)
   Purchases of Federal Home Loan Bank stock                            (2,598,500)    (6,356,000)    (6,909,700)
   Purchases of Federal Reserve Bank stock                                      --             --         (9,000)
   Redemptions of Federal Reserve Bank stock                                    --        138,650             --
   Redemptions of Federal Home Loan Bank stock                           1,727,900      6,272,900      6,409,600
   Purchases of premises, equipment and software                          (408,326)      (280,657)    (1,072,130)
   Proceeds from sales of premises and equipment                             1,270
   Net (increase) in real estate owned, net                                 (5,188)            --             --
   Proceeds from sale of assets of CNB Insurance Services, Inc.                 --        153,332             --
   Proceeds from sale of stock                                              59,369             --             --
   Investment in (return of capital from) title company                       (123)           332            575
   Net decrease in federal funds sold                                        9,000         29,000         53,000
   Premiums paid on life insurance                                         (58,434)       (58,822)       (58,822)
                                                                      ------------   ------------   ------------
      NET CASH (USED IN) INVESTING ACTIVITIES                         $(14,150,504)  $(20,119,002)  $(23,963,720)
                                                                      ------------   ------------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase (decrease) in demand and savings deposits             $(21,417,803)  $ (7,063,703)  $ 12,911,331
   Net increase (decrease) in time deposits                             14,979,777     20,858,017     (1,351,443)
   Net increase (decrease) in securities sold under repurchase
      agreement                                                                 --             --       (216,909)
   Net increase in FHLB borrowings                                      19,000,000        700,000      9,200,000
   Purchase of treasury stock                                             (207,633)            --             --
   Cash dividends paid                                                    (770,414)      (705,394)      (659,589)
                                                                      ------------   ------------   ------------
      NET CASH PROVIDED BY FINANCING ACTIVITIES                       $ 11,583,927   $ 13,788,920   $ 19,883,390
                                                                      ------------   ------------   ------------
      NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS            $    432,320   $ (2,726,479)  $     37,313
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                           7,358,773     10,085,252     10,047,939
                                                                      ------------   ------------   ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                              $  7,791,093   $  7,358,773   $ 10,085,252
                                                                      ============   ============   ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

   Cash paid during the year:
      Interest                                                        $  7,516,032   $  5,808,377   $  3,782,100
      Income taxes                                                    $  1,165,500   $  1,386,500   $  1,362,725
   Net transfer to foreclosed real estate, held for sale from loans
      receivable                                                      $    145,657   $         --   $         --
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements


                                       40

<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The following is a description of the more significant accounting policies
     of CNB Financial Services, Inc. and its subsidiary.

     NATURE OF OPERATIONS:

     CNB Financial Services, Inc. ("CNB" or the "Company") is a financial
     services holding company incorporated under the laws of West Virginia in
     March 2000. It became a bank holding company when it acquired all of the
     common stock of Citizens National Bank of Berkeley Springs on August 31,
     2000.

     Citizens National Bank operated as a national banking association until
     October 16, 2006 at which time it became a West Virginia state chartered
     bank. Concurrent with the charter change, the bank began operating under
     the legal name of CNB Bank, Inc.

     CNB Bank, Inc. (the "Bank"), a wholly owned subsidiary of CNB, provides a
     variety of banking services to individuals and businesses through its two
     locations in Morgan County, West Virginia, three locations in Berkeley
     County, West Virginia and one location in Washington County, Maryland. Its
     primary deposit products are demand deposits and certificates of deposit,
     and its primary lending products are commercial business, real estate
     mortgage and installment loans.

     In February 2001, CNB became a 50% member in a limited liability company,
     Morgan County Title Insurance Agency, LLC which sells title insurance. In
     January 2003, the other two members in the limited liability corporation
     purchased a portion of CNB's membership making each member's share 33%.

     The Bank formed CNB Insurance Services, Inc., a wholly owned subsidiary,
     which was a property and casualty insurance agency selling primarily
     personal lines of insurance. On April 27, 2006, CNB Insurance Services,
     Inc. entered into an agreement with Maiden Financial, Inc. Under the terms
     of the agreement, which was completed on June 1, 2006, CNB Insurance
     Services, Inc. sold to Maiden Financial Inc. certain assets constituting
     CNB Insurance Services, Inc.'s insurance business for a purchase price of
     $153,332 resulting in a gain of $143,913.

     The accounting policies of the Company and its subsidiary conform to
     accounting principles generally accepted in the United States of America
     and to general practices within the banking industry.

     PRINCIPLES OF CONSOLIDATION:

     The consolidated financial statements of CNB Financial Services, Inc.
     include the accounts of the Company and its wholly owned subsidiary, CNB
     Bank, Inc. and CNB Insurance Services, Inc., a wholly owned subsidiary of
     the Bank. The financial statements of Morgan County Title Insurance Agency,
     LLC are not included in these consolidated financial statements. All
     significant intercompany transactions and balances have been eliminated.

     USE OF ESTIMATES:

     The preparation of the consolidated financial statements in conformity with
     accounting principles generally accepted in the United States of America
     requires management to make estimates and assumptions that affect the
     reported amounts of assets and liabilities and disclosure of contingent
     assets and liabilities at the date of the financial statements and the
     reported amounts of revenues and expenses during the reporting period.
     Actual results could differ from those estimates. CNB's most significant
     estimates are the allowance for loan losses, depreciable lives of fixed
     assets and actuarial assumptions used in determining pension expense and
     liability, liability for postretirement benefits, liability for deferred
     compensation and liability for current and deferred taxes.

     SECURITIES AND MORTGAGE-BACKED SECURITIES:

     Investments in equity securities that have readily determinable fair values
     and all investments in debt securities are classified and accounted for as
     follows:


                                       41

<PAGE>

     a. Debt securities that management has the positive intent and ability to
     hold to maturity are classified as held-to-maturity securities and reported
     at amortized cost.

     b. Debt and equity securities that are bought and held principally for the
     purpose of selling them in the near term are classified as trading
     securities and reported at fair value, with unrealized gains and losses
     included in earnings.

     c. Debt and equity securities not classified as either held-to-maturity
     securities or trading securities are classified as available-for-sale
     securities and reported at fair value, with unrealized gains and losses
     excluded from earnings and reported in a separate component of
     shareholders' equity as accumulated other comprehensive income.

     CNB classifies all investments as available for sale, except for stock in
     the Federal Home Loan Bank, which are restricted investments.

     Interest and dividends on securities, including amortization of premiums
     and accretion of discounts, are included in interest income. Declines in
     the fair value of available-for-sale securities below their cost that are
     deemed to be other than temporary are reflected in earnings as realized
     losses. In estimating other-than-temporary impairment losses, management
     considers (1) the length of time and the extent to which the fair value has
     been less than cost, (2) the financial condition and near-term prospects of
     the issuer, and (3) the intent and ability of the Company to retain its
     investment in the issuer for a period of time sufficient to allow for any
     anticipated recovery in fair value. Realized gains and losses from the
     sales of securities are determined using the specific identification
     method.

     IMPAIRED LOANS:

     Impaired loans are defined as those loans for which it is probable that
     contractual amounts due will not be received. Statement of Financial
     Accounting Standards (SFAS) No. 114, "Accounting by Creditors for
     Impairment of a Loan," as amended by SFAS No. 118, requires that the
     measurement of impaired loans is based on the present value of expected
     future cash flows discounted at the historical effective interest rate,
     except that all collateral-dependent loans are measured for impairment
     based on the fair value of the collateral. Larger groups of small-balance
     loans such as residential mortgage and installment loans that are
     considered to be part of homogeneous loan pools are aggregated for the
     purpose of measuring impairment, and therefore, are not subject to these
     statements. Management has established a dollar-value threshold for
     commercial loans. The larger commercial loans are evaluated for impairment.
     At December 31, 2007, there are nine loans considered to be impaired with
     an unguaranteed balance of $1.2 million. See Note 4: Loans and Leases
     Receivable in the Notes to Consolidated Financial Statements for additional
     discussion. No loans were considered to be impaired at December 31, 2006.

     ALLOWANCE FOR LOAN LOSSES:

     The allowance for loan losses is maintained at a level which, in
     management's judgment, is adequate to absorb credit losses inherent in the
     loan portfolio. The amount of the allowance is based on management's
     evaluation of the collectibility of the loan portfolio, including the
     nature of the portfolio, credit concentrations, trends in historical loss
     experience, specific impaired loans and economic conditions.

     Allowances for loan losses and impaired loans are generally determined
     based on collateral values or the present value of estimated cash flows.
     The allowance is increased by a provision for loan losses, which is charged
     to expense and reduced by charge-offs, net of recoveries. Changes in the
     allowance are charged or credited to the provision for loan losses. Because
     of uncertainties inherent in the estimation process, management's estimate
     of credit losses inherent in the loan portfolio and the related allowance
     may change in the near term.

     LOANS HELD FOR SALE:

     Mortgage loans held for sale are recorded at the lower of cost or market
     value. Gains and losses realized from the sale of loans and adjustments to
     market value are included in non-interest income. Mortgage loans are
     sometimes sold to Taylor, Bean & Whitaker, the Federal Home Loan Mortgage
     Corporation (Freddie Mac), West Virginia Housing Development Fund, other
     secondary market investors and other commercial banks. Beginning in January
     2007, all fixed rate residential mortgage loans were sold to secondary
     market investors. At December 31, 2007, the Bank had $672,000 in loans held
     for sale.

     INTANGIBLE ASSETS:

     Intangible assets represent the acquisition of customer lists, contracts
     and records in the amount of $66,267 by CNB


                                       42

<PAGE>

     Insurance Services, Inc. and the $780,616 premium from the purchase of core
     deposit relationships as part of the Hancock branch acquisition. The CNB
     Insurance Services, Inc. intangible assets were being amortized over four
     years on a straight line basis and the core deposit intangible
     relationships from the Hancock branch acquisition are being amortized over
     seven years on a straight line basis. As of June 1, 2006, the remaining
     unamortized balance of the intangible asset for CNB Insurance Services,
     Inc. amounting to $9,419 was included in the sale to Maiden Financial. See
     Note 16: Discontinued Operations in the Notes to Consolidated Financial
     Statements for additional discussion.

     LOAN SERVICING:

     The cost of mortgage servicing rights is amortized in proportion to, and
     over the period of, estimated net servicing revenues. Impairment of
     mortgage servicing rights is assessed based on the fair value of those
     rights. Fair values are estimated using discounted cash flows based on a
     current market interest rate. For purposes of measuring impairment, the
     rights are stratified based on the predominant risk characteristics of the
     underlying loans: product type, investor type, interest rate, term and
     geographic location. An analysis of the risk characteristics of CNB's loan
     servicing portfolio allows for all loans to be defined by one risk
     category. As of December 31, 2007 and 2006, there were no mortgage
     servicing assets or liabilities. See Note 5: Loan Servicing in the Notes to
     Consolidated Financial Statements for additional discussion.

     INTEREST INCOME ON LOANS:

     Interest on loans is accrued and credited to income based on the principal
     amount outstanding. The accrual of interest on loans is discontinued at the
     time the loan becomes 90 days past due unless in management's judgment
     collectibility of interest is assured.

     NONPERFORMING/NONACCRUAL ASSETS:

     Nonperforming/nonaccrual assets consist of loans on which interest is no
     longer accrued, loans which have been restructured in order to allow the
     borrower the ability to maintain control of the collateral, real estate
     acquired by foreclosure and real estate upon which deeds in lieu of
     foreclosure have been accepted. Interest previously accrued but not
     collected on nonaccrual loans is reversed against current income when a
     loan is placed on a nonaccrual basis. Nonaccrual loans are restored to
     accrual status when all delinquent principal and interest become less than
     90 days past due unless management determines the loan should remain on
     nonaccrual status.

     LOANS AND LEASES RECEIVABLE:

     Loans and leases receivable that management has the intent and ability to
     hold for the foreseeable future or until maturity or payoff are reported at
     their outstanding unpaid principal balances reduced by any charge-offs or
     specific valuation accounts and net of any deferred fees or costs on
     originated loans, or unamortized premiums or discounts on purchased loans.

     LOAN ORIGINATION FEES AND COSTS:

     Loan origination fees, net of certain direct costs of originating loans are
     being deferred and recognized over the contractual life of the loan as an
     adjustment of the yield on the related loan.

     PREMISES AND EQUIPMENT:

     Premises and equipment are carried at cost less accumulated depreciation.
     Depreciation is calculated on both straight-line and accelerated methods
     over the estimated useful lives of 5 to 50 years for buildings and
     improvements, 10 to 20 years for land improvements, 5 years for bank owned
     automobiles and 3 to 40 years for equipment. Computer software is being
     amortized over 3 years. Maintenance and repairs are charged to operating
     expenses as incurred.

     INCOME TAXES:

     Deferred tax assets or liabilities are computed based on the difference
     between the financial statement and income tax bases of assets and
     liabilities using the enacted marginal tax rate. Deferred income tax
     expenses or credits are based on the changes in the asset or liability from
     period to period.

     When tax returns are filed, it is highly certain that some positions taken
     would be sustained upon examination by the taxing authorities, while others
     are subject to uncertainty about the merits of the position taken or the
     amount of the position that would be ultimately sustained. The benefit of a
     tax position is recognized in the financial statements in


                                       43

<PAGE>

     the period during which, based on all available evidence, management
     believes it is more likely than not that the position will be sustained
     upon examination, including the resolution of appeals or litigation
     processes, if any. Tax positions taken are not offset or aggregated with
     other positions. Tax positions that meet the more-likely-than-not
     recognition threshold are measured as the largest amount of tax benefit
     that is more than 50 percent likely of being realized upon settlement with
     the applicable taxing authority. The portion of the benefits associated
     with tax positions taken that exceeds the amount measured as described
     above would be reflected as a liability for unrecognized tax benefits in
     the accompanying balance sheet along with any associated interest and
     penalties that would be payable to the taxing authorities upon examination.

     Interest and penalties associated with unrecognized tax benefits would be
     classified as additional income taxes in the statement of income.

     At December 31, 2007, there was no liability for unrecognized tax benefits.

     PENSION PLAN:

     Pension plan costs are funded by annual contributions as required by
     applicable regulations.

     CASH AND CASH EQUIVALENTS:

     For purposes of the Consolidated Statements of Cash Flows, cash and cash
     equivalents include all highly liquid debt instruments purchased with a
     maturity of three months or less except for federal funds sold. Those
     amounts are included in the balance sheet captions "Cash and Due From
     Banks." Included in "Cash and Due From Banks" are interest bearing deposits
     with FHLB in the amount of $25,282 and $3,118 at December 31, 2007 and
     2006, respectively.

     EARNINGS AND DIVIDENDS PER SHARE:

     Basic earnings and dividends per share are computed on the basis of the
     weighted average number of 457,274 shares of common stock outstanding in
     2007 and 458,048 shares of common stock outstanding in 2006 and 2005.

     OFF-BALANCE SHEET FINANCIAL INSTRUMENTS:

     In the ordinary course of business, CNB has entered into off-balance sheet
     financial instruments consisting of commitments to extend credit,
     commercial lines of credit and letters of credit. Such financial
     instruments are recorded in the financial statements when they become due
     or payable.

     POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS:

     Postretirement insurance benefits are provided to selected officers and
     employees. During the years that the employee renders the necessary
     service, the Bank accrues the cost of providing postretirement health and
     life insurance benefits to the employee.

     FORECLOSED REAL ESTATE:

     Real estate properties acquired through, or in lieu of, loan foreclosure
     are to be sold and are initially recorded at fair value at the date of
     foreclosure, establishing a new cost basis. After foreclosure, valuations
     are periodically performed by management and the real estate is carried at
     the lower of carrying amount or fair value less estimated cost to sell.
     Revenue and expenses from operations and changes in the valuation allowance
     are included in loss on foreclosed real estate. The historical average
     holding period for such properties is twelve to eighteen months. At
     December 31, 2007, CNB owns one property acquired through loan foreclosure
     with a carrying value of $150,845.

     TRUST ASSETS:

     Assets held by CNB in a fiduciary or agency capacity are not included in
     the consolidated financial statements since such assets are not assets of
     CNB. In accordance with banking industry practice, income from fiduciary
     activities is generally recognized on the cash basis which is not
     significantly different from amounts that would have been recognized on the
     accrual basis.

     ADVERTISING COSTS:

     The Company expenses advertising costs in the period in which they are
     incurred. Advertising costs amounted to $205,444, $173,792 and $161,180 for
     the years ended December 31, 2007, 2006 and 2005, respectively.


                                       44

<PAGE>

     COMPREHENSIVE INCOME:

     Comprehensive income is defined as the change in equity from transactions
     and other events from nonowner sources. It includes all changes in equity
     except those resulting from investments by shareholders and distributions
     to shareholders. Comprehensive income includes net income and certain
     elements of "other comprehensive income" such as foreign currency
     translations; accounting for futures contracts; employers accounting for
     pensions; and accounting for certain investments in debt and equity
     securities.

     CNB has elected to report its comprehensive income in the Consolidated
     Statements of Changes in Shareholders' Equity. The elements of "other
     comprehensive income" that CNB has are the unrealized gains or losses on
     available for sale securities, additional minimum pension liability
     adjustment and unrecognized pension costs.

     The components of the change in "other comprehensive income" were as
     follows:

<TABLE>
<CAPTION>
                                                      2007         2006         2005
                                                   ----------   ---------   -----------
<S>                                                <C>          <C>         <C>
Additional pension liability adjustment
   arising during the year                         $  528,893   $(886,267)  $  (355,276)
Unrealized holding gains (losses) arising during
   the year on securities available for sale        1,037,731     124,727    (1,155,548)
Reclassification adjustment for losses
   realized in net income on sale of securities         2,688      37,271        16,165
                                                   ----------   ---------   -----------
Net change in accumulated other comprehensive
   income before taxes                             $1,569,312   $(724,269)  $(1,494,659)
Tax effect                                           (596,338)    275,222       567,970
                                                   ----------   ---------   -----------
Net change                                         $  972,974   $(449,047)  $  (926,689)
                                                   ==========   =========   ===========
</TABLE>

     RECENTLY ISSUED ACCOUNTING STANDARDS

     On March 17, 2006, the Financial Accounting Standards Board ("FASB") issued
     Statement of Financial Accounting Standards ("SFAS") No. 156, "Accounting
     for Servicing of Financial Assets." The new Standard, which is an amendment
     to SFAS No. 140, will simplify the accounting for servicing assets and
     liabilities, such as those common with mortgage securitization activities.

     Specifically, the new Standard addresses the recognition and measurement of
     separately recognized servicing assets and liabilities and provides an
     approach to simplify efforts to obtain hedge-like (offset) accounting.

     The standard also:

          1.   Clarifies when an obligation to service financial assets should
               be separately recognized as a servicing asset or a servicing
               liability.

          2.   Requires that a separately recognized servicing asset or
               servicing liability be initially measured at fair value, if
               practicable.

          3.   Permits an entity with a separately recognized servicing asset or
               servicing liability to choose either of the following methods for
               subsequent measurement:

                    a.   Amortization Method

                    b.   Fair Value Method

     The new Standard was effective for all separately recognized servicing
     assets and liabilities acquired or issued after the beginning of an
     entity's fiscal year that begins after September 15, 2006, with early
     adoption permitted. This standard has no material impact on CNB.


                                       45

<PAGE>

     In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements",
     which defines fair value, establishes a framework for measuring fair value
     under GAAP, and expands disclosures about fair value measurements. SFAS No.
     157 applies to other accounting pronouncements that require or permit fair
     value measurements. The new guidance is effective for financial statements
     issued for fiscal years beginning after November 15, 2007, and for interim
     periods within those fiscal years. CNB is currently evaluating the
     potential impact, if any, of the adoption of SFAS No. 157 on their
     consolidated financial position, results of operations and cash flows.

     On September 29, 2006, the FASB issued SFAS No. 158, "Employers' Accounting
     for Defined Benefit Pension and Other Postretirement Plans", which amends
     SFAS No. 87 and SFAS No. 106 to require recognition of the over funded or
     under funded status of pension and other postretirement benefit plans on
     the balance sheet. Under SFAS No. 158, gains and losses, prior service
     costs and credits, and any remaining transition amounts under SFAS No. 87
     and SFAS No. 106 that have not yet been recognized through net periodic
     benefit cost will be recognized in accumulated other comprehensive income,
     net of tax effects, until they are amortized as a component of net periodic
     cost. Under SFAS No. 158, the measurement date - the date at which the
     benefit obligation and plan assets is measured - is required to be the
     company's fiscal year end. The recognition requirements of SFAS No. 158 are
     effective for publicly held companies for fiscal years ending after
     December 15, 2006. CNB has implemented SFAS No. 158 effective December 31,
     2006 with the exception of the measurement date requirement. This
     requirement is effective for fiscal years ending after December 15, 2008.
     CNB does not anticipate early adoption of the measurement date requirement.

     In July 2006, the FASB issued Interpretation No. 48 (FIN 48), "Accounting
     for Uncertainty in Income Taxes." FIN 48 clarifies the accounting for
     uncertainty in income taxes recognized in an enterprise's financial
     statements in accordance with SFAS No. 109, "Accounting for Income Taxes."
     FIN 48 prescribes a recognition threshold and measurement attributable for
     the financial statement recognition and measurement of a tax position taken
     or expected to be taken in a tax return. FIN 48 also provides guidance on
     derecognition, classification, interest and penalties, accounting in
     interim periods, disclosures and transitions. FIN 48 was effective for
     fiscal years beginning after December 15, 2006. CNB has adopted FIN 48 for
     the year beginning January 1, 2007.

     In September 2006, the Emerging Issues Task Force of the FASB (EITF) issued
     EITF 06-04. This pronouncement affects the recording of post retirement
     costs of insurance of bank owned life insurance policies in instances where
     the Company has promised a continuation of life insurance coverage to
     persons post retirement. EITF 06-04 requires that a liability equal to the
     present value of the cost of post retirement insurance be recorded during
     the insured employees' term of service. The terms of this pronouncement
     require the initial recording of this liability with a corresponding
     adjustment to retained earnings to reflect the implementation of the
     pronouncement. This EITF becomes effective for fiscal years beginning after
     December 15, 2007. CNB is currently evaluating the potential impact, if
     any, of the adoption of EITF 06-04 on their consolidated financial
     condition, results of operations and cash flows.

     In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
     Financial Assets and Financial Liabilities." The fair value option
     established by this SFAS permits all entities to choose to measure eligible
     items at fair value at specified election dates. A business entity shall
     report unrealized gains and losses on items for which the fair value option
     has been elected in earnings at each subsequent reporting date. This SFAS
     is effective for fiscal years beginning after November 15, 2007. Early
     adoption is permitted as of the fiscal year that begins before November 15,
     2007 provided the entity also elects to apply the provisions of SFAS No.
     157, "Fair Value Measurements." CNB elected not to early adopt SFAS No. 159
     or 157. CNB has no current plans to exercise the fair value option for any
     eligible items under SFAS No. 159.

     In November 2007, the Securities and Exchange Commission issued Staff
     Accounting Bulletin (SAB) 109, "Written Loan Commitments Recorded at Fair
     Value Through Earnings." SAB 109 expresses the views of the staff regarding
     written loan commitments that are accounted for at fair value through
     earnings under generally accepted accounting principles. This SAB
     supersedes SAB 105 and expresses the current view of the staff that,
     consistent with the guidance in SFAS No. 156, Accounting for Servicing of
     Financial Assets, and SFAS No. 159, The Fair Value Option for Financial
     Assets and Financial Liabilities, the expected net future cash flows
     related to the associated servicing of the loan should be included in the
     measurement of all written loan commitments that are accounted for at fair
     value


                                       46

<PAGE>

     through earnings. SAB 105 also indicted that the staff believed that
     internally-developed intangible assets (such as customer relationship
     intangible assets) should not be recorded as part of the fair value of a
     derivative loan commitment. This SAB retains that staff view and broadens
     its application to all written loan commitments that are accounted for at
     fair value through earnings.

     The staff expects registrants to apply the views in Question 1 of SAB 109
     on a prospective basis to derivative loan commitments issued or modified in
     fiscal quarters beginning after December 15, 2007. The adoption of SAB 109
     is not expected to have a material impact on CNB's financial statements.

     In December 2007, the Securities and Exchange Commission issued Staff
     Accounting Bulletin (SAB) 110, "Share Based Payment." SAB 110 expresses the
     views of the staff regarding the use of a "simplified" method, as discussed
     in SAB 107, in developing an estimate of expected term of "plain vanilla"
     share options in accordance with SFAS No. 123 (revised 2004), "Share-Based
     Payment." SAB 110 is effective January 1, 2008. The adoption of SAB 110 is
     not expected to have a material impact on CNB's financial statements.

     In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations."
     This statement replaces SFAS No. 141, "Business Combinations." This
     statement retains the fundamental requirements in SFAS 141 that the
     acquisition method of accounting be used for all business combinations and
     for an acquirer to be identified for each business combination. This SFAS
     applies prospectively to business combinations for which the acquisition
     date is on or after the beginning of the first annual reporting period
     beginning on or after December 15, 2008. The effective date of this
     Statement is the same as that of the related Statement No. 160. An entity
     may not apply it before that date. CNB is currently evaluating the
     potential impact, if any, of the adoption of SFAS No. 141(R) on their
     consolidated financial position, results of operations and cash flows.

     In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests
     in Consolidated Financial Statements." This statement amends ARB 51 to
     establish accounting and reporting standards for the noncontrolling
     interest in a subsidiary and for the deconsolidation of a subsidiary. This
     SFAS is effective for fiscal years beginning after December 15, 2008. The
     effective date of this Statement is the same as that of the related
     statement 141(R). This Statement shall be applied prospectively as of the
     beginning of the fiscal year in which this Statement is initially applied,
     except for the presentation and disclosure requirements. The presentation
     and disclosure requirements shall be applied retrospectively for all
     periods presented. Earlier adoption is prohibited. CNB is currently
     evaluating the potential impact, if any, of the adoption of SFAS No. 160 on
     their consolidated financial position, results of operations and cash
     flows.

NOTE 2.  INVESTMENT IN LIMITED LIABILITY COMPANY

     In February 2001, CNB paid $5,000 to become a 50% member in a limited
     liability company, Morgan County Title Insurance Agency, LLC for the
     purpose of selling title insurance. In January 2003, the other two members
     in the limited liability company purchased a portion of CNB's membership
     making each member's share 33%. CNB accounts for their investment in Morgan
     County Title Insurance Agency, LLC as part of "Other Assets" using the
     equity method of accounting.

     The following represents the limited liability company's financial
     information:


                                       47

<PAGE>

                   MORGAN COUNTY TITLE INSURANCE AGENCY, LLC
                        STATEMENTS OF FINANCIAL CONDITION
                                   (UNAUDITED)
                           DECEMBER 31, 2007 AND 2006

<TABLE>
<CAPTION>
                               2007     2006
                              ------   ------
<S>                           <C>      <C>
ASSETS
   Cash                       $3,684   $3,415
                              ------   ------
      TOTAL ASSETS            $3,684   $3,415
                              ======   ======
MEMBERS' EQUITY               $3,684   $3,415
                              ------   ------
      TOTAL MEMBERS' EQUITY   $3,684   $3,415
                              ======   ======
</TABLE>

                   MORGAN COUNTY TITLE INSURANCE AGENCY, LLC
                              STATEMENTS OF INCOME
                                   (UNAUDITED)
                  YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005

<TABLE>
<CAPTION>
                             2007      2006       2005
                           -------   --------   --------
<S>                        <C>       <C>        <C>
INCOME
   Insurance commissions   $65,653   $101,084   $122,148
                           -------   --------   --------
      TOTAL INCOME         $65,653   $101,084   $122,148
                           -------   --------   --------
EXPENSES
   Management fees         $26,776   $ 32,300   $ 37,500
   Other expenses            2,908      6,725        874
                           -------   --------   --------
      TOTAL EXPENSES       $29,684   $ 39,025   $ 38,374
                           -------   --------   --------
      NET INCOME           $35,969   $ 62,059   $ 83,774
                           =======   ========   ========
</TABLE>


                                       48

<PAGE>

                    MORGAN COUNTY TITLE INSURANCE AGENCY, LLC
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                  YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005

<TABLE>
<CAPTION>
                                                    2007       2006       2005
                                                  --------   --------   --------
<S>                                               <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                        $ 35,969   $ 62,059   $ 83,774
                                                  --------   --------   --------
      NET CASH PROVIDED BY OPERATING ACTIVITIES   $ 35,969   $ 62,059   $ 83,774
                                                  --------   --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES
   Profit and capital distributed                 $(35,700)  $(63,000)  $(85,500)
                                                  --------   --------   --------
      NET CASH (USED IN) FINANCING ACTIVITIES     $(35,700)  $(63,000)  $(85,500)
                                                  --------   --------   --------
      NET INCREASE IN CASH AND CASH EQUIVALENTS   $    269   $   (941)  $ (1,726)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR       3,415      4,356      6,082
                                                  --------   --------   --------
CASH AND CASH EQUIVALENTS AT END OF YEAR          $  3,684   $  3,415   $  4,356
                                                  ========   ========   ========
</TABLE>

NOTE 3. SECURITIES

     The amortized cost and estimated market value of debt securities at
     December 31, 2007 and 2006 by contractual maturity are shown below.
     Expected maturities will differ from contractual maturities because
     borrowers may have the right to call or prepay obligations with or without
     call or prepayment penalties.

     Securities are summarized as follows:


                                       49
<PAGE>

<TABLE>
<CAPTION>
                                                                  2007                           WEIGHTED
                                          ---------------------------------------------------     AVERAGE
                                                           GROSS        GROSS      ESTIMATED        TAX
                                           AMORTIZED    UNREALIZED   UNREALIZED       FAIR      EQUIVALENT
                                              COST         GAINS       LOSSES        VALUE         YIELD
                                          -----------   ----------   ----------   -----------   ----------
<S>                                       <C>           <C>          <C>          <C>           <C>
Available for sale:
   U.S. Government agencies
      and corporations
      Within one year                     $13,892,949    $ 21,851     $  4,802    $13,909,998      4.58%
      After 1 but within 5 years           15,236,652      33,176       31,057     15,238,771      4.09
      After 5 but within 10 years           1,987,371      33,929           --      2,021,300      5.86
                                          -----------    --------     --------    -----------
                                          $31,116,972    $ 88,956     $ 35,859    $31,170,069      4.42%
                                          -----------    --------     --------    -----------
   States and political subdivisions
      Within one year                     $   551,482    $    311     $  1,711    $   550,082      2.85%
      After 1 but within 5 years            2,064,702      24,344       22,266      2,066,780      3.40
      After 5 but within 10 years           8,990,637       2,330      132,262      8,860,705      3.55
                                          -----------    --------     --------    -----------
                                          $11,606,821    $ 26,985     $156,239    $11,477,567      3.49%
                                          -----------    --------     --------    -----------
   Mortgage backed securities:
      Government issued or guaranteed     $14,149,889    $ 86,271     $ 97,135    $14,139,025      5.37%
                                          -----------    --------     --------    -----------
   Collateralized mortgage obligations:
      Government issued or guaranteed     $ 7,236,286    $ 80,871     $  7,907    $ 7,309,250      5.54%
      Privately issued                      1,923,882      12,116       14,677      1,921,321      5.92
                                          -----------    --------     --------    -----------
                                          $ 9,160,168    $ 92,987     $ 22,584    $ 9,230,571      5.62%
                                          -----------    --------     --------    -----------
Total securities available for sale       $66,033,850    $295,199     $311,817    $66,017,232      4.63%
                                          ===========    ========     ========    ===========
Restricted:
   Federal Home Loan Bank stock           $ 2,623,600    $     --     $     --    $ 2,623,600      6.00%
                                          ===========    ========     ========    ===========
</TABLE>


                                       50

<PAGE>

<TABLE>
<CAPTION>
                                                                  2006                           WEIGHTED
                                          ---------------------------------------------------     AVERAGE
                                                           GROSS        GROSS      ESTIMATED        TAX
                                           AMORTIZED    UNREALIZED   UNREALIZED       FAIR      EQUIVALENT
                                              COST         GAINS       LOSSES        VALUE         YIELD
                                          -----------   ----------   ----------   -----------   ----------
<S>                                       <C>           <C>          <C>          <C>           <C>
Available for sale:
   U.S. Government agencies
      and corporations
      After 1 but within 5 years          $24,562,491     $    --    $  634,791   $23,927,700      4.17%
      After 5 but within 10 years           6,486,929       2,059        69,338     6,419,650      5.06
                                          -----------     -------    ----------   -----------
                                          $31,049,420     $ 2,059    $  704,129   $30,347,350      4.35%
                                          -----------     -------    ----------   -----------
   States and political subdivisions
      Within one year                     $   840,774     $    --    $    4,922   $   835,852      2.78%
      After 1 but within 5 years            1,850,578       3,003        34,366     1,819,215      3.24
      After 5 but within 10 years           9,527,281          10       162,575     9,364,716      3.50
                                          -----------     -------    ----------   -----------
                                          $12,218,633     $ 3,013    $  201,863   $12,019,783      3.41%
                                          -----------     -------    ----------   -----------
   Mortgage backed securities:
      Government issued or guaranteed     $ 7,266,442     $    --    $  162,126   $ 7,104,316      4.86%
                                          -----------     -------    ----------   -----------
   Collateralized mortgage obligations:
      Government issued or guaranteed     $   283,693     $ 2,370    $       --   $   286,063      6.14%
      Privately issued                      1,112,183       4,471           831     1,115,823      5.53
                                          -----------     -------    ----------   -----------
                                          $ 1,395,876     $ 6,841    $      831   $ 1,401,886      5.65%
                                          -----------     -------    ----------   -----------
Total securities available for sale       $51,930,371     $11,913    $1,068,949   $50,873,335      4.24%
                                          ===========     =======    ==========   ===========
Restricted:
   Federal Home Loan Bank stock           $ 1,753,000     $    --    $       --   $ 1,753,000      5.25%
                                          ===========     =======    ==========   ===========
</TABLE>

     The carrying value of securities pledged to secure public deposits and for
     other purposes as required or permitted by law totaled $19,138,493 at
     December 31, 2007 and $37,066,060 at December 31, 2006.

     Proceeds from sales of securities available for sale (excluding maturities
     and calls) for the years ended December 31, 2007, 2006 and 2005 were
     $3,796,971, $12,218,693 and $37,026,097, respectively. Gross gains and
     (losses) of $5,537 and $(8,282) in 2007, $27,291 and $(65,000) in 2006, and
     $145,013 and $(161,178) in 2005 were realized on the respective sales.
     Gross gains of $57 during 2007 were realized on called securities.

     The following tables show our investments' gross unrealized losses and fair
     value, aggregated by investment category and length of time that individual
     securities have been in a continuous unrealized loss position, at December
     31, 2007 and 2006, respectively.


                                       51

<PAGE>

<TABLE>
<CAPTION>
                                                                            2007
                                       ------------------------------------------------------------------------------
                                         LESS THAN 12 MONTHS          12 MONTHS OR MORE                TOTAL
                                       ------------------------   ------------------------   ------------------------
                                           FAIR      UNREALIZED       FAIR      UNREALIZED       FAIR      UNREALIZED
DESCRIPTION OF SECURITIES                 VALUE        LOSSES        VALUE        LOSSES        VALUE        LOSSES
-------------------------              -----------   ----------   -----------   ----------   -----------   ----------
<S>                                    <C>           <C>          <C>           <C>          <C>           <C>
U.S. Government agencies
   and corporations                    $ 6,999,300     $   700    $12,876,348    $ 35,159    $19,875,648    $ 35,859
State and political subdivisions         2,067,956      24,596      8,102,090     131,643     10,170,046     156,239
Mortgage backed securities:
   Government issued or guaranteed         846,880           4      5,448,594      97,131      6,295,474      97,135
Collateralized mortgage obligations:
   Government issued or guaranteed       1,548,343       7,907             --          --      1,548,343       7,907
   Privately issued                        467,086      14,677             --          --        467,086      14,677
                                       -----------     --------   -----------    --------    -----------    --------
Total temporarily impaired
   securities                          $11,929,565     $ 47,884   $26,427,032    $263,933    $38,356,597    $311,817
                                       ===========     ========   ===========    ========    ===========    ========
</TABLE>

<TABLE>
<CAPTION>
                                                                            2006
                                       -----------------------------------------------------------------------------
                                         LESS THAN 12 MONTHS          12 MONTHS OR MORE                TOTAL
                                       -----------------------   ------------------------   ------------------------
                                          FAIR      UNREALIZED       FAIR      UNREALIZED       FAIR      UNREALIZED
DESCRIPTION OF SECURITIES                 VALUE       LOSSES        VALUE        LOSSES        VALUE        LOSSES
-------------------------              ----------   ----------   -----------   ----------   -----------   ----------
<S>                                    <C>          <C>          <C>           <C>          <C>           <C>
U.S. Government agencies
   and corporations                    $       --     $   --     $29,352,749   $  704,129   $29,352,749   $  704,129
State and political subdivisions          985,973      5,087      10,415,625      196,776    11,401,598      201,863
Mortgage backed securities:
   Government issued or guaranteed        702,014        750       6,402,302      161,376     7,104,316      162,126
Collateralized mortgage obligations:
   Privately issued                       533,727        831              --           --       533,727          831
                                       ----------     ------     -----------   ----------   -----------   ----------
Total temporarily impaired
   securities                          $2,221,714     $6,668     $46,170,676   $1,062,281   $48,392,390   $1,068,949
                                       ==========     ======     ===========   ==========   ===========   ==========
</TABLE>

     Management evaluates securities for other-than-temporary impairment at
     least on a quarterly basis, and more frequently when economic or market
     concerns warrant such evaluation. Consideration is given to (1) the length
     of time and the extent to which the fair value has been less than cost, (2)
     the financial condition and near-term prospects of the issuer, and (3) the
     intent and ability of the bank to retain its investment in the issuer for a
     period of time sufficient to allow for any anticipated recovery in fair
     value.


                                       52

<PAGE>

     At December 31, 2007, there were 87 available for sale securities that have
     unrealized losses with aggregate depreciation of .8% from their amortized
     cost basis. The unrealized losses relate principally to government
     obligations. In analyzing the issuer's financial condition, management
     considers whether the securities are issued by the federal government or
     its agencies and whether downgrades by bond rating agencies have occurred.
     Since the securities are primarily government bonds or agency issues and
     management has the ability to hold the securities until maturity or until
     such a time that the market value has recovered the unrealized losses,
     management determined that no declines are deemed to be
     other-than-temporary.

NOTE 4. LOANS AND LEASES RECEIVABLE

     Major classifications of loans at December 31, 2007 and 2006 were as
     follows:

<TABLE>
<CAPTION>
                                     2007           2006
                                 ------------   ------------
<S>                              <C>            <C>
Loans:
   Real estate                   $143,012,227   $143,766,546
   Commercial real estate          37,587,676     36,966,855
   Consumer                        15,544,183     15,933,470
   Commercial                       8,179,019      9,172,160
   Overdrafts                         104,240        163,469
                                 ------------   ------------
                                 $204,427,345   $206,002,500
Leases                                112,838        123,733
                                 ------------   ------------
                                 $204,540,183   $206,126,233
Net deferred loan fees, costs,
   premiums and discounts             273,123        324,283
Allowance for loan losses          (2,144,461)    (2,131,523)
                                 ------------   ------------
                                 $202,668,845   $204,318,993
                                 ============   ============
</TABLE>

     At December 31, 2007, approximately $84,163,000 or 46.6% of the real estate
     loans had fixed rates of interest and $96,437,000 or 53.4% had adjustable
     rates of interest.

     An analysis of the allowance for loan losses was as follows:

<TABLE>
<CAPTION>
                                        2007         2006         2005
                                     ----------   ----------   ----------
<S>                                  <C>          <C>          <C>
Balance, beginning                   $2,131,523   $2,022,130   $1,807,449
   Provision charged to operations      168,999      275,500      352,000
   Recoveries                           183,281      151,513      168,413
   Loans charged off                   (339,342)    (317,620)    (305,732)
                                     ----------   ----------   ----------
Balance, ending                      $2,144,461   $2,131,523   $2,022,130
                                     ==========   ==========   ==========
</TABLE>

     The following is a summary of information pertaining to impaired loans:


                                       53

<PAGE>

<TABLE>
<CAPTION>
                                                   December 31,
                                                -----------------
                                                   2007      2006
                                                ----------   ----
                                                  (in thousands)
<S>                                             <C>           <C>
Impaired loans without a valuation allowance    $       --    $--
Impaired loans with a valuation allowance (1)    1,410,100     --
                                                ----------    ---
Total impaired loans                            $1,410,100    $--
                                                ==========    ===
Valuation allowance related to impaired loans   $  239,896    $--
</TABLE>

(1)  Some of these loans have government agency guarantees reducing the bank's
     exposure by $261,592.

<TABLE>
<CAPTION>
                                                   Years Ended
                                                   December 31,
                                                -----------------
                                                   2007      2006
                                                ----------   ----
                                                  (in thousands)
<S>                                             <C>           <C>
Average investment in impaired loans             $705,050     $--
                                                 ========     ===
Interest income recognized on impaired loans     $ 85,185     $--
                                                 ========     ===
Interest income recognized on a cash basis on
   impaired loans                                $ 85,185     $--
                                                 ========     ===
</TABLE>

     Loans are placed on nonaccrual status at the time the loan becomes 90 days
     past due, unless in management's judgment collectibility is assured. A
     summary of nonperforming loans and foreclosed assets is as follows:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                         ---------------------
                                                            2007        2006
                                                         ----------   --------
<S>                                                      <C>          <C>
Foreclosed real estate (other real estate owned)         $  150,845   $     --
Impaired loans, not on nonaccrual                           847,852         --
Nonaccrual loans, impaired (1)                              562,248         --
Nonaccrual loans, not impaired                              551,904    402,014
Loans past due 90 days or more still accruing interest           --      4,942
                                                         ----------   --------
   Total non-performing assets                           $2,112,849   $406,956
                                                         ==========   ========
</TABLE>

(1)  Some of these loans have government agency guarantees reducing the bank's
     exposure by $261,592.

     The contractual amount of interest that would have been recorded on
     nonaccrual and impaired loans during 2007 and 2006 was $73,023 and $19,455,
     respectively. The amount of interest income that was recorded on nonaccrual
     and impaired loans during 2007 and 2006 was $116,070 and $19,549,
     respectively.

     The Bank is not committed to lend additional funds to debtors whose loans
     are nonperforming.

NOTE 5. LOAN SERVICING

     Mortgage loans serviced for others are not included in the accompanying
     financial statements. The unpaid principal balances of mortgage loans
     serviced for others were $3,587,661 and $3,610,043 at December 31, 2007 and
     2006, respectively.


                                       54

<PAGE>

     Custodial balances maintained in connection with the foregoing loan
     servicing, and included in demand deposits, were $121,553 and $16,080 at
     December 31, 2007 and 2006, respectively.

     The Bank did not capitalize or have any amortization of mortgage servicing
     rights in 2007, 2006 or 2005. There were no assets or liabilities for
     mortgage servicing rights at December 31, 2007 or 2006.

NOTE 6. PREMISES AND EQUIPMENT

     Major classifications of premises and equipment at December 31 were as
     follows:

<TABLE>
<CAPTION>
                                         2007         2006
                                      ----------   ----------
<S>                                   <C>          <C>
Land and land improvements            $2,077,658   $2,072,388
Banking house - Main                   1,516,466    1,504,751
Banking house - Valley Road branch       547,936      547,936
Banking house - Hedgesville branch       770,643      770,643
Banking house - Martinsburg branch       697,006      697,006
Banking house - Hancock branch           230,999      230,999
Banking house - Spring Mills branch      885,697      885,697
Bank owned automobiles                    41,657       41,657
Furniture, fixtures and equipment      3,096,484    2,889,032
                                      ----------   ----------
                                      $9,864,546   $9,640,109
   Less accumulated depreciation       3,753,273    3,312,815
                                      ----------   ----------
                                      $6,111,273   $6,327,294
                                      ==========   ==========
</TABLE>

     Depreciation expense amounted to $514,141, $505,421 and $462,198 in 2007,
     2006 and 2005, respectively.

     Computer software, net of accumulated amortization, included in the
     statement of financial condition caption "Other Assets" amounted to
     $145,274 and $101,733 at December 31, 2007 and 2006, respectively.
     Amortization expense on computer software amounted to $65,620, $89,887 and
     $253,744 in 2007, 2006 and 2005, respectively.

NOTE 7. INTANGIBLE ASSETS

     Amortized intangible assets representing customer lists, contracts and
     records acquired by CNB Insurance Services, Inc. had a carrying amount of
     $66,267 and accumulated amortization of $54,370 at December 31, 2005. On
     June 1, 2006, CNB Insurance Services, Inc. was sold along with its customer
     lists which had a remaining unamortized cost of $9,419. See Note 16:
     Discontinued Operations in the Notes to Consolidated Financial Statements
     for further discussion on the sale. These intangibles were being amortized
     on a straight line basis.

     Amortized intangible asset representing the $780,616 premium from the
     purchase of core deposit relationships as part of the Hancock branch
     acquisition has accumulated amortization of $394,955 and $283,438 at
     December 31, 2007 and 2006 respectively. This core deposit intangible asset
     from the Hancock branch acquisition is being amortized over seven years on
     a straight line basis.

     Amortization expense on intangible assets amounted to $111,516, $113,995
     and $117,465 in 2007, 2006 and 2005, respectively.

     The estimated amortization expense for the next four succeeding years will
     be:


                                       55

<PAGE>

<TABLE>
<S>    <C>
2008   $111,516
2009   $111,516
2010   $111,516
2011   $ 51,114
</TABLE>

NOTE 8. TIME DEPOSITS

     At December 31, 2007, the scheduled maturities of time deposits are as
     follows:

<TABLE>
<CAPTION>
         TIME DEPOSITS       ALL TIME
       $100,000 AND OVER     DEPOSITS
       -----------------   ------------
<S>    <C>                 <C>
2008      $30,245,757        79,883,644
2009        4,508,704        12,306,065
2010        6,798,750        21,445,813
2011        1,331,867         6,066,156
2012        1,608,901         5,510,962
          -----------      ------------
          $44,493,978      $125,212,641
          ===========      ============
</TABLE>

NOTE 9. FEDERAL HOME LOAN BANK BORROWINGS

<TABLE>
<CAPTION>
                                         DECEMBER 31,
                                  -------------------------
                                      2007          2006
                                  -----------   -----------
<S>                               <C>           <C>
Federal Home Loan Bank advances   $37,500,000   $18,500,000
</TABLE>

     CNB Bank, Inc. is a member of the Federal Home Loan Bank of Pittsburgh
     ("FHLB") and, as such, can take advantage of the FHLB program for overnight
     and term advances at published daily rates. At December 31, 2007, the Bank
     has short term and long term advances with FHLB. FHLB short term advances
     mature within one year and carry an interest rate of 3.8% at December 31,
     2007. The Bank has a two year convertible select long term loan with a one
     year lock out period carrying an interest rate of 3.77% at December 31,
     2007. Under the terms of a blanket collateral agreement, term advances from
     the FHLB are collateralized by qualifying mortgages and U.S. Government
     agencies and mortgage-backed securities. In addition, all of the Bank's
     stock in the FHLB is pledged as collateral for such debt. Term advances
     available under this agreement are limited by available and qualifying
     collateral and the amount of FHLB stock held by the borrower.


                                       56

<PAGE>

<TABLE>
<CAPTION>
                                          2007          2006
                                      -----------   -----------
<S>                                   <C>           <C>
Maximum balance outstanding
   at any month-end during the year   $37,500,000   $27,500,000
Average balance for the year           18,212,781    18,730,712
Weighted average rate for the year           4.97%         5.13%
Weighted average rate at year-end            3.80%         5.40%
</TABLE>

NOTE 10. UNUSED LINES OF CREDIT

     The Bank entered into an open-ended unsecured line of credit with PNC for
     $5,000,000 for federal fund purchases. Funds issued under this agreement
     are at the PNC federal funds rate effective at the time of borrowing. The
     line matures November 28, 2008. The Bank had not drawn on these funds at
     December 31, 2007. The Bank entered into a line of credit with SunTrust
     Bank for $4,500,000 for federal fund purchases. Funds issued under this
     agreement are at the SunTrust Bank federal funds rate effective at the time
     of borrowing. The Bank had not drawn on these funds at December 31, 2007.

NOTE 11. PENSION PLAN

     The Bank is a member of The Allegheny Group Retirement Plan (formerly The
     West Virginia Bankers Association Retirement Plan), a multi-employer,
     defined benefit pension plan. All employees participate in the plan after
     completing one year of service and attaining the age of 21. The benefits
     are based on years of service and the highest average earnings during any
     five consecutive calendar years. Plan assets are invested primarily in
     corporate bonds, common stocks and U.S. Government and Agency Securities.

     The following table sets forth information about the Bank's plan as of
     October 31:


                                       57
<PAGE>

<TABLE>
<CAPTION>
                                                           2007          2006          2005
                                                        ----------   -----------   -----------
<S>                                                     <C>          <C>           <C>
CHANGE IN BENEFIT OBLIGATION:
   Benefit obligation at
      beginning of year                                 $4,859,682   $ 4,186,024   $ 3,423,734
   Adjustment for plan changes                                  --            --       106,789
   Service cost                                            247,821       232,392       162,067
   Interest cost                                           267,244       248,471       229,400
   Actuarial (gain) loss                                  (181,949)      346,984       428,791
   Benefits paid                                          (177,895)     (154,189)     (164,757)
                                                        ----------   -----------   -----------
   Benefit obligation at end of year                    $5,014,903   $ 4,859,682   $ 4,186,024
                                                        ----------   -----------   -----------
CHANGE IN PLAN ASSETS:
   Fair value of plan assets at beginning of year       $3,365,278   $ 2,760,085   $ 2,427,640
   Actual return on plan assets                            522,339       346,212       212,052
   Employer contribution                                   387,767       413,170       285,150
   Benefits paid                                          (177,895)     (154,189)     (164,757)
                                                        ----------   -----------   -----------
   Fair value of plan assets at end of year             $4,097,489   $ 3,365,278   $ 2,760,085
                                                        ----------   -----------   -----------
Funded status                                           $ (917,414)  $(1,494,404)  $(1,425,939)
Unrecognized net actuarial (gain) loss                   1,061,955     1,578,504     1,464,092
Unrecognized prior service cost                            127,566       139,910        98,574
                                                        ----------   -----------   -----------
   Prepaid (accrued) benefit cost                       $  272,107   $   224,010   $   136,727
                                                        ==========   ===========   ===========
ADDITIONAL INFORMATION
Increase (decrease) in minimum liability included
   in other comprehensive income (prior to adjustment
   to implement SFAS No. 158)                           $       --   $  (122,863)  $   355,276
</TABLE>

     The accumulated benefit obligation for the defined benefit pension plan was
     $4,174,568 and $3,990,462 at October 31, 2007 and October 31, 2006,
     respectively.

<TABLE>
<S>                                                         <C>          <C>           <C>
COMPONENTS OF NET PERIODIC COST:
   Service cost                                             $  247,821   $   232,392   $ 162,067
   Interest cost                                               267,244       248,471     229,400
   Expected return on plan assets                             (267,153)     (248,419)   (230,617)
   Amortization of prior service costs                          12,344        12,344       8,215
   Recognized net actuarial loss                                79,414        81,099      37,472
                                                            ----------   -----------   ---------
      Net periodic plan cost                                $  339,670   $   325,887   $ 206,537
                                                            ==========   ===========   =========
</TABLE>


                                       58

<PAGE>

<TABLE>
<S>                                                         <C>          <C>           <C>
WEIGHTED AVERAGE ASSUMPTIONS USED TO
   DETERMINE BENEFIT OBLIGATIONS AS OF OCTOBER 31:
      Discount rate                                                6.0%         5.75%       5.75%
      Expected return on plan assets                               8.0%          8.0%        8.5%
      Rate of compensation increase                                3.5%          3.5%        3.0%
WEIGHTED AVERAGE ASSUMPTIONS USED TO DETERMINE
   NET PERIODIC BENEFIT COST FOR YEARS ENDED OCTOBER 31:
      Discount rate                                               5.75%         5.75%        6.5%
      Expected return on plan assets                               8.0%          8.5%        8.5%
      Rate of compensation increase                                3.5%          3.0%        3.5%
AMOUNTS RECOGNIZED IN THE STATEMENT OF FINANCIAL POSITION
   CONSIST OF:
      Accrued benefit cost                                  $ (917,414)  $(1,494,404)  $(793,994)
      Intangible assets                                             --            --      98,574
      Accumulated other comprehensive income                 1,189,521     1,718,414     832,147
                                                            ----------   -----------   ---------
      Net amount recognized                                 $  272,107   $   224,010   $ 136,727
                                                            ==========   ===========   =========
</TABLE>

PLAN ASSETS

<TABLE>
<CAPTION>
                                                   PERCENTAGE OF PLAN
                         TARGET      ALLOWABLE   ASSETS AT OCTOBER 31,
                       ALLOCATION   ALLOCATION   ---------------------
                          2007         RANGE          2007   2006
                       ----------   ----------        ----   ----
<S>                    <C>          <C>          <C>         <C>
Plan assets
   Equity securities       70%       40 - 80%          68%    74%
   Debt securities         25%       20 - 40%          27%    20%
   Real estate              0%             0%           0%     0%
   Other                    5%        3 - 10%           6%     6%
                                                      ---    ---
   Total                                              100%   100%
                                                      ===    ===
</TABLE>

     INVESTMENT POLICY AND STRATEGY

     The investments are pooled with the pension assets of other members of the
     plan and are allocated based on a formula established by the pension
     committee.

     The policy, as established by the Pension Committee, is to invest in assets
     per the target allocations stated above. The assets will be reallocated
     periodically to meet the above target allocations. The investment policy
     will be reviewed periodically, under the advisement of a certified
     investment advisor, to determine if the policy should be changed.

     The overall investment return goal is to achieve a return greater than a
     blended mix of stated indices tailored to the same asset mix of the plan
     assets by 0.5% after fees over a rolling 5-year moving average basis.

     Allowable assets include cash equivalents, fixed income securities, equity
     securities, exchange traded index funds and GICs. Prohibited investments
     include, but are not limited to, commodities and future contracts, private
     placements, options, limited partnerships, venture capital investments,
     real estate and IO, PO, and residual tranche CMOs. Unless


                                       59

<PAGE>

     a specific derivative security is allowed per the plan document, permission
     must be sought from the Pension Committee to include such investments.

     In order to achieve a prudent level of portfolio diversification, the
     securities of any one company should not exceed more than 10% of the total
     plan assets, and no more than the 25% of total plan assets should be
     invested in any one industry (other than securities of U.S. Government or
     agencies). Additionally, no more than 20% of the plan assets shall be
     invested in foreign securities (both equity and fixed).

     DETERMINATION OF EXPECTED LONG-TERM RATE OF RETURN

     The expected long-term rate of return for the plan's total assets is based
     on the expected return of each of the above categories, weighted based on
     the median of the target allocation for each class.

CASH FLOWS

<TABLE>
<S>                                                     <C>
Expected contributions for fiscal year ending
  December 31, 2008
     Expected employer contributions                    $  453,740
     Expected employee contributions                    $       --
Estimated future benefit payments reflecting expected
  future service for the fiscal year(s) ending
     12/31/2008                                         $  191,642
     12/31/2009                                         $  204,346
     12/31/2010                                         $  209,253
     12/31/2011                                         $  213,830
     12/31/2012                                         $  234,520
     12/31/2013 - 12/31/2017                            $1,278,323
</TABLE>

NOTE 12. 401(K) PROFIT SHARING PLAN

     All employees are eligible to participate in the Bank's 401(k) Profit
     Sharing Plan after completing one year of service. Employees may defer up
     to 15% of their salary in 2007, 2006 and 2005. The Bank may, at the
     discretion of the Board of Directors, match all or part of the employee
     deferrals. For 2007, the Bank matched 40% of employee deferrals up to 5% of
     salary. For 2006 and 2005, the Bank matched 75% of employee deferrals up to
     5% of salary. The percentage of match varies based on the Bank's profit
     level. The assets of the 401(k) Profit Sharing Plan are managed by the
     Bank's trust department.

     The Bank's contribution charged to income during 2007, 2006 and 2005 was
     $40,938, $64,750 and $63,789, respectively.

NOTE 13. DEFERRED COMPENSATION PLAN

     The Bank has a plan pursuant to which a director may elect to waive receipt
     of all or a portion of his fees for Board of Directors' meetings or
     committee meetings in exchange for a retirement benefit to be received
     during a ten-year period after attaining a certain age. The Bank has
     acquired life insurance on the lives of participating directors to fund its
     obligation under the plan. The cash surrender value of these life insurance
     policies has been recorded as an asset. The present value of payments to be
     paid to directors or their beneficiaries for services rendered to date has
     been recorded as a liability. The net expense for these benefits was
     $49,517, $21,641 and $17,948 for 2007, 2006 and 2005, respectively.


                                       60

<PAGE>

NOTE 14. INCOME TAXES

     CNB and its subsidiary, the Bank, file income tax returns in the U.S.
     federal jurisdiction and the State of West Virginia. The Bank also files an
     income tax return in the State of Maryland. With few exceptions, CNB is no
     longer subject to U.S. federal, state or local income tax examinations by
     tax authorities for years before 2004.

     CNB adopted the provisions of FASB Interpretations No. 48, "Accounting for
     Uncertainty in Income Taxes", on January 1, 2007 with no impact on the
     financial statements.

     Included in the balance sheet at December 31, 2007 are tax positions
     related to loan charge offs for which the ultimate deductibility is highly
     certain but for which there is uncertainty about the timing of such
     deductibility. Because of the impact of deferred tax accounting, other than
     interest and penalties, the disallowance of the shorter deductibility
     period would not affect the annual effective tax rate but would accelerate
     the payment of cash to the taxing authority to an earlier period.

     Income taxes reflected in the statements of income are as follows:

<TABLE>
<CAPTION>
                                        YEARS ENDED DECEMBER 31,
                                  ------------------------------------
                                     2007         2006         2005
                                  ----------   ----------   ----------
<S>                               <C>          <C>          <C>
Federal:
  Current                         $1,114,801   $1,194,270   $1,154,256
  Deferred                           (35,201)     (39,537)     (68,049)
State:
  Current                            118,005      161,659      163,560
  Deferred                            (6,814)      (7,813)     (11,351)
                                  ----------   ----------   ----------
     Provision for income taxes   $1,190,791   $1,308,579   $1,238,416
                                  ==========   ==========   ==========
</TABLE>

     Deferred income taxes reflect the impact of "temporary differences" between
     the amount of assets and liabilities for financial reporting purposes and
     such amounts as measured by tax laws and regulations.

     The following is a reconciliation of the statutory federal income tax rate
     applied to pre-tax accounting income, with the income tax provisions in the
     statements of income.


                                       61

<PAGE>

<TABLE>
<CAPTION>
                                             YEARS ENDED DECEMBER 31,
                                       ------------------------------------
                                          2007         2006         2005
                                       ----------   ----------   ----------
<S>                                    <C>          <C>          <C>
Income tax expense at the
   statutory rate (34%)                $1,256,316   $1,284,262   $1,252,558
Increases (decreases) resulting
   from:
   Nontaxable interest income,
      net of non-deductible interest
      expense                            (116,607)    (120,442)    (164,735)
   State income taxes, net of
      federal income tax benefit          102,085      104,293       91,908
   Other                                  (51,003)      40,466       58,685
                                       ----------   ----------   ----------
      Provision for income taxes       $1,190,791   $1,308,579   $1,238,416
                                       ==========   ==========   ==========
</TABLE>

     Federal and state income taxes receivable included in the balance sheet as
     other assets was $141,108 and $242,662 at December 31, 2007 and 2006,
     respectively.

     The components of deferred taxes included in the statement of financial
     condition as of December 31 are as follows:

<TABLE>
<CAPTION>
                                          2007         2006
                                       ----------   ----------
<S>                                    <C>          <C>
Deferred tax assets:
   Provision for loan losses           $  707,644   $  702,985
   Deferred compensation plan             343,363      307,424
   Postretirement benefits                 69,329       67,522
   Intangible asset                        75,831       54,420
   Unrecognized pension costs             452,018      652,997
   Severence package                           --        2,592
   Net unrealized loss on securities
      available for sale                    6,315      401,674
                                       ----------   ----------
                                       $1,654,500   $2,189,614
                                       ----------   ----------
Deferred tax liabilities:
   CSV life insurance                  $ (298,220)  $ (278,904)
   Defined benefit plan                   (97,959)     (80,643)
   Depreciation                          (330,478)    (347,901)
                                       ----------   ----------
                                       $ (726,657)  $ (707,448)
                                       ----------   ----------
Net deferred tax asset (liability)     $  927,843   $1,482,166
                                       ==========   ==========
</TABLE>

     Generally accepted accounting principles require a valuation allowance
     against deferred tax assets if, based on the weight of available evidence,
     it is more likely than not that some or all of the deferred tax assets will
     not be realized. The Bank believes that the deferred tax assets will be
     realized and therefore no valuation allowance was established.

NOTE 15. OTHER OPERATING EXPENSES


                                       62

<PAGE>

<TABLE>
<CAPTION>
                                                    YEARS ENDED DECEMBER 31,
                                            ------------------------------------
                                               2007         2006         2005
                                            ----------   ----------   ----------
<S>                                         <C>          <C>          <C>
Stationery, supplies and printing           $  194,794   $  245,038   $  206,124
Data processing                                118,212      116,177      132,595
Director's fees and deferred compensation      261,667      226,766      196,323
Postage                                        130,305      124,099      132,363
Telephone                                      105,471      102,854      104,249
Professional fees                              408,285      267,380      288,353
Regulatory assessment fees                      45,550      110,291      103,895
Outside service fees                            29,354       14,584       22,231
ATM and debit card fees                        250,814      215,218      222,539
Advertising                                    205,444      173,792      161,180
Amortization of intangible                     111,516      111,516      117,465
Amortization of software                        65,620       89,887      253,744
Other                                          391,204      316,674      118,019
                                            ----------   ----------   ----------
   Total other operating expenses           $2,318,236   $2,114,276   $2,059,080
                                            ==========   ==========   ==========
</TABLE>

NOTE 16. DISCONTINUED OPERATIONS

     On April 27, 2006, CNB Insurance Services, Inc., a wholly-owned subsidiary
     of CNB Bank, Inc., which is a wholly-owned subsidiary of CNB Financial
     Services, Inc., entered into an agreement with Maiden Financial Inc. Under
     the terms of the agreement, CNB Insurance Services, Inc. sold to Maiden
     Financial Inc. certain assets constituting CNB Insurance Services, Inc.'s
     insurance business for a purchase price of $153,332 on June 1, 2006
     resulting in a gain on sale of $143,913.

     The following table summarizes the net results of the discontinued
     operations of CNB Insurance Services, Inc.:

<TABLE>
<CAPTION>
                                                            2006
                                    ----------------------------------------------------
                                     FIRST     SECOND     THIRD     FOURTH    YEAR ENDED
                                    QUARTER   QUARTER    QUARTER   QUARTER   DECEMBER 31
                                    -------   --------   -------   -------   -----------
<S>                                 <C>       <C>        <C>       <C>       <C>
Net income (loss) from operations
of CNB Insurance Services, Inc.      $2,354   $(22,404)   $(58)    $   352     $(19,756)
Gain on sale of CNB Insurance
   Services, Inc.                        --    143,913      --          --      143,913
                                     ------   --------    ----     -------     --------
Net Income before taxes              $2,354   $121,509    $(58)    $   352     $124,157
Taxes                                   902     42,595      --       1,956       45,453
                                     ------   --------    ----     -------     --------
Net income (loss)                    $1,452   $ 78,914    $(58)    $(1,604)    $ 78,704
                                     ======   ========    ====     =======     ========
</TABLE>


                                       63
<PAGE>

NOTE 17.  FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

     CNB is a party to financial instruments with off-balance-sheet risk in the
     normal course of business to meet the financing needs of its customers.
     These financial instruments include commitments to extend credit, and
     standby letters of credit. Those instruments involve, to varying degrees,
     elements of credit and interest rate risk which are not reflected in the
     statements of financial condition. The contractual amounts of those
     instruments reflect the extent of involvement CNB has in particular classes
     of financial instruments.

     CNB's exposure to credit loss in the event of nonperformance by the other
     party to the financial instrument for commitments to extend credit and
     standby letters of credit written is represented by the contractual amount
     of those instruments. CNB uses the same credit policies in making
     commitments and conditional obligations as it does for on-balance-sheet
     instruments.

     Commitments to extend credit are agreements to lend funds as long as there
     is no violation of any condition established in the contract. Commitments
     generally have fixed expiration dates or other termination clauses.
     Commercial line of credit arrangements usually require payment of a fee.

     CNB evaluates each customer's creditworthiness and related collateral on a
     case-by-case basis. The amount of collateral obtained if deemed necessary
     by CNB upon extension of credit is based on management's credit evaluation
     of the customer. Collateral held varies but may include accounts
     receivable, inventory, real estate, equipment and income-producing
     commercial properties.

     Standby letters of credit written are conditional commitments issued by CNB
     to guarantee the performance of a customer to a third party. Those
     guarantees are issued to support public and private borrowing arrangements,
     bond financing and similar transactions. The credit risk involved in
     issuing a letter of credit is essentially the same as that involved in
     extending loan facilities to customers.

     A summary of off-balance sheet instruments as of December 31 is as follows:

<TABLE>
<CAPTION>
                                                       2007          2006
                                                   -----------   -----------
<S>                                                <C>           <C>
Commitments to originate:
Fixed rate loans:

   Residential real estate loans to be sold        $   639,500   $   640,623
   Other residential real estate                       134,000       462,630
Adjustable rate loans:

   Other commerical real estate and construction     1,295,000       625,000
   Other residential real estate                     1,162,100       444,100
   Commerical and other                                460,000       550,000

Letters of credit                                      914,353     1,022,059
Undisbursed portion of construction
   loans                                             1,419,345     3,288,286
Available credit granted on commercial
   loans                                             8,174,480    10,479,484
Available credit on personal lines
   of credit                                           293,791       280,198
Undisbursed portion of home equity loans             4,950,486     4,270,602
Commitments to sell real estate loans                  672,100            --
                                                   -----------   -----------
                                                   $20,115,155   $22,062,982
                                                   ===========   ===========
</TABLE>


                                       64

<PAGE>

NOTE 18.  SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

     CNB's primary business is mortgage loans, which consists of originating
     residential, construction, multi-family and commercial real estate loans
     and consumer and commercial loans. CNB's primary lending area is Morgan and
     Berkeley Counties, West Virginia and Washington County, Maryland. Loans are
     occasionally made in surrounding counties in West Virginia, Maryland,
     Virginia and Pennsylvania.

     CNB also invested in mortgage backed securities and collateralized mortgage
     obligations. See Note 3: Securities.

     CNB evaluates each customer's creditworthiness on a case-by-case basis. The
     amount of collateral obtained if deemed necessary by CNB upon the extension
     of credit is based on management's credit evaluation of the customer.
     Collateral held varies but generally includes vehicles, equipment and real
     estate.

     The Company maintains substantial balances of cash on hand, federal funds
     sold and investments held in safekeeping at corresponding banks. The
     balances held at the correspondent banks are in excess of the Federal
     Deposit Insurance Corporation insurance limit. Management considers this to
     be a normal business risk.

NOTE 19. LEGAL CONTINGENCIES

     Various legal claims arise from time to time in the normal course of
     business which, in the opinion of management, will have no material effect
     on the bank's consolidated financial statements.

NOTE 20. REGULATORY MATTERS

     The primary source of funds for the dividends paid by CNB Financial
     Services, Inc. is dividends received from its banking subsidiary. The
     payment of dividends by banking subsidiaries is subject to various banking
     regulations. The most restrictive provision requires regulatory approval if
     dividends declared in any calendar year exceed the total net profits, as
     defined, of that year plus the retained net profits, as defined, of the
     preceding two years. At January 1, 2008, CNB has $6,054,000 available for
     dividends.

     The Bank is subject to various regulatory capital requirements administered
     by the banking regulatory agencies. Pursuant to capital adequacy
     guidelines, the Bank must meet specific capital guidelines that involve
     various quantitative measures of the banks' assets, liabilities, and
     certain off-balance-sheet items as calculated under regulatory accounting
     practices. The Bank's capital amounts and classifications are also subject
     to qualitative judgments by the regulators about components, risk
     weightings and other factors.

     Quantitative measures established by regulation to ensure capital adequacy
     require the Bank to maintain minimum amounts and ratios of total and Tier I
     capital to risk-weighted assets (as defined), and of Tier I capital (as
     defined) to average assets (as defined). Management believes, as of
     December 31, 2007, that the Bank meets all capital adequacy requirements to
     which it is subject.

     As of December 31, 2007 and 2006, the most recent notification from the
     banking regulatory agencies categorized the Bank as well-capitalized under
     the regulatory framework for prompt corrective action. To be categorized as
     well-capitalized, the Bank must maintain minimum total risk-based, Tier I
     risk-based, and Tier I leverage ratios. There are no conditions or events
     since that notification that management believes have changed the
     institution's category.


                                       65

<PAGE>

     The Bank's actual capital amounts and ratios are presented in the table.

<TABLE>
<CAPTION>
                                                          RATIO
                                        ----------------------------------------
                              ACTUAL                               TO BE WELL
                              AMOUNT             FOR CAPITAL   CAPITALIZED UNDER
                                IN                 ADEQUACY    PROMPT CORRECTIVE
                            THOUSANDS   ACTUAL     PURPOSES    ACTION PROVISIONS
                            ---------   ------   -----------   -----------------
<S>                         <C>         <C>      <C>           <C>
As of December 31, 2007:
   Total Capital
      (to Risk Weighted
         Assets)             $24,195    14.14%       8.0%            10.0%
   Tier I Capital
      (to Risk Weighted
      Assets)                $22,056    12.89%       4.0%             6.0%
   Tier I Capital
      (to Average Assets)    $22,056     7.70%       4.0%             5.0%
As of December 31, 2006:
   Total Capital
      (to Risk Weighted
         Assets)             $22,295    13.29%       8.0%            10.0%
   Tier I Capital
      (to Risk Weighted
         Assets)             $20,198    12.04%       4.0%             6.0%
   Tier I Capital
      (to Average Assets)    $20,198     7.34%       4.0%             5.0%
</TABLE>

NOTE 21.  REGULATORY RESTRICTIONS

     Included in Cash and Due From Banks are average daily reserve balances the
     Bank is required to maintain with the Federal Reserve Bank. The amount of
     these required reserves, calculated based on percentages of certain deposit
     balances was $3.8 million at December 31, 2007.

     Certain regulations prohibit the transfer of funds from the Bank to
     affiliates in the form of loans or advances exceeding 10% of its capital
     stock and surplus. In addition, all loans or advances to nonbank affiliates
     must be secured by specific collateral. Based on this limitation, there was
     approximately $2.4 million available for loans or advances to affiliates of
     the Bank as of December 31, 2007, at which time there were no material
     loans or advances outstanding.

NOTE 22. FAIR VALUE OF FINANCIAL INSTRUMENTS

     The fair value of financial instruments is the amount at which the asset or
     obligation could be exchanged in a current transaction between willing
     parties, other than in a forced or liquidation sale. Fair value estimates
     are made at a specific point in time based on relevant market information
     and information about the financial instrument. These estimates do not
     reflect any premium or discount that could result from offering for sale at
     one time the entire holdings of a particular financial instrument. Because
     no market value exists for a significant portion of the financial
     instruments, fair value estimates are based on judgments regarding future
     expected loss experience, current economic conditions, risk characteristics
     of various financial instruments, and other factors. These estimates are
     subjective in


                                       66

<PAGE>

     nature, involve uncertainties and matters of judgment and, therefore,
     cannot be determined with precision. Changes in assumptions could
     significantly affect the estimates.

     Fair value estimates are based on financial instruments both on and off the
     balance sheet without attempting to estimate the value of anticipated
     future business, and the value of assets and liabilities that are not
     considered financial instruments. Additionally, tax consequences related to
     the realization of the unrealized gains and losses can have a potential
     effect on fair value estimates and have not been considered in many of the
     estimates.

     The following methods and assumptions were used to estimate the fair value
     of significant financial instruments:

     Financial Assets:

          The carrying amounts of cash, due from Banks and federal funds sold
          are considered to approximate fair value. The fair value of investment
          securities, including available for sale, are generally based on
          quoted market prices. The fair value of loans is estimated using a
          combination of techniques, including discounting estimated future cash
          flows and quoted market prices of similar instruments where available.

     Financial Liabilities:

          The carrying amounts of deposit liabilities payable on demand are
          considered to approximate fair value. For fixed maturity (time)
          deposits, fair value is estimated by discounting estimated future cash
          flows using currently offered rates for deposits of similar remaining
          maturities.

     Off-Balance-Sheet-Financial Instruments:

          The fair value of commitments to extend credit and standby letters of
          credit is estimated using the fees currently charged to enter into
          similar agreements.

     The estimated fair value of financial instruments at December 31, is
     summarized as follows:

<TABLE>
<CAPTION>
                                             2007                        2006
                                 ---------------------------   ---------------------------
                                   CARRYING                      CARRYING
                                    AMOUNT       FAIR VALUE       AMOUNT       FAIR VALUE
                                 ------------   ------------   ------------   ------------
<S>                              <C>            <C>            <C>            <C>
Financial Assets:
   Cash, due from banks and
      federal funds sold         $  7,791,093   $  7,791,093   $  7,367,773   $  7,367,773
   Securities available for
      sale                         66,017,231     66,017,231     50,873,335     50,873,335
   Loans                          202,668,845    204,293,376    204,318,993    203,467,447
   Accrued interest receivable      1,406,804      1,406,804      1,354,041      1,354,041
Financial Liabilities:
   Demand deposits               $101,432,074   $101,432,074   $122,849,877   $122,849,877
   Time deposits                  125,212,640    131,298,172    110,232,863    113,762,131
   Accrued interest payable         1,281,166      1,281,166      1,071,990      1,071,990
   FHLB borrowings                 37,500,000     37,500,000     18,500,000     18,500,000
Off-Balance Sheet
   Financial Instruments:
   Letters of credit             $         --   $      7,392   $         --   $      6,087
</TABLE>


                                       67

<PAGE>

NOTE 23. RELATED PARTY TRANSACTIONS

     In the ordinary course of business, the Bank has granted loans to executive
     officers, directors, and their affiliates amounting to $2,204,308 and
     $2,363,763 at December 31, 2007 and 2006, respectively. During 2007,
     $77,264 of new loans were made, or became reportable, and repayments and
     other decreases totaled $236,719. Deposits from related parties held by the
     Bank at December 31, 2007 and 2006 amounted to $5,664,037 and $5,167,964,
     respectively.

NOTE 24. PARENT COMPANY ONLY FINANCIAL INFORMATION

     The following represents parent company only financial information:


                                       68

<PAGE>

                STATEMENTS OF FINANCIAL CONDITION (PARENT ONLY)
                           DECEMBER 31, 2007 AND 2006

<TABLE>
<CAPTION>
                                                                   2007          2006
                                                               -----------   -----------
<S>                                                            <C>           <C>
ASSETS
   Cash                                                        $   345,226   $   248,947
   Investment in CNB Bank, Inc.                                 22,432,322    20,040,017
   Investment in Morgan County Title Insurance Agency, LLC           1,243         1,120
   Other assets                                                     67,845        30,961
                                                               -----------   -----------
         TOTAL ASSETS                                          $22,846,636   $20,321,045
                                                               ===========   ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
   Accrued expenses and other liabilities                      $    25,191   $    (1,217)
                                                               -----------   -----------
         TOTAL LIABILITIES                                     $    25,191   $    (1,217)
                                                               -----------   -----------
SHAREHOLDERS' EQUITY
   Common stock, $1 par value; 5,000,000 shares
      authorized; 458,048 shares issued at December 31, 2007
      and December 31, 2006 and 454,949 and 458,048
      outstanding at December 31, 2007 and December 31, 2006   $   458,048   $   458,048
   Capital surplus                                               4,163,592     4,163,592
   Retained earnings                                            19,155,244    17,421,402
   Accumulated other comprehensive income (loss)                  (747,806)   (1,720,780)
                                                               -----------   -----------
                                                               $23,029,078   $20,322,262
   Less treasury stock, at cost, 3,099 shares in 2007             (207,633)           --
                                                               -----------   -----------
         TOTAL SHAREHOLDERS' EQUITY                            $22,821,445   $20,322,262
                                                               -----------   -----------
         TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY            $22,846,636   $20,321,045
                                                               ===========   ===========
</TABLE>

                       STATEMENTS OF INCOME (PARENT ONLY)
                  YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005

<TABLE>
<CAPTION>
                                                        2007         2006         2005
                                                     ----------   ----------   ----------
<S>                                                  <C>          <C>          <C>
Dividend income                                      $1,154,024   $  855,394   $  659,589
Income from title company                                12,023       20,668       27,924
Noninterest expense                                    (118,006)     (66,610)     (44,744)
                                                     ----------   ----------   ----------
INCOME BEFORE INCOME TAXES AND EQUITY IN
   UNDISTRIBUTED EARNINGS OF CNB BANK, INC.          $1,048,041   $  809,452   $  642,769
Income tax (expense) benefit                             36,884       12,922        6,844
                                                     ----------   ----------   ----------
INCOME BEFORE EQUITY IN UNDISTRIBUTED EARNINGS OF
   CNB BANK, INC.                                    $1,084,925   $  822,374   $  649,613
Equity in undistributed earnings of CNB Bank, Inc.    1,419,331    1,646,288    1,795,966
                                                     ----------   ----------   ----------
NET INCOME                                           $2,504,256   $2,468,662   $2,445,579
                                                     ==========   ==========   ==========
</TABLE>


                                       69

<PAGE>

                     STATEMENTS OF CASH FLOWS (PARENT ONLY)
                  YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005

<TABLE>
<CAPTION>
                                                               2007          2006          2005
                                                           -----------   -----------   -----------
<S>                                                        <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                 $ 2,504,256   $ 2,468,662   $ 2,445,579
Adjustments to reconcile net income to net cash
   provided by operating activities:
      Deferred income taxes                                         --            --           602
      (Increase) in other assets                               (36,884)      (19,166)      (11,201)
      Increase (decrease) in accrued expenses and other
         liabilities                                            26,408           764        (2,061)
      Equity in undistributed earnings of CNB Bank, Inc.    (1,419,331)   (1,496,288)   (1,795,966)
                                                           -----------   -----------   -----------
         NET CASH PROVIDED BY OPERATING ACTIVITIES         $ 1,074,449   $   953,972   $   636,953
                                                           -----------   -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES
   Investment in title company                             $      (123)  $       332   $       575
                                                           -----------   -----------   -----------
      NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIE   $      (123)  $       332   $       575
                                                           -----------   -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES
   Cash dividends paid                                     $  (770,414)  $  (705,394)  $  (659,589)
   Purchase of treasury stock, cost                           (207,633)           --            --
                                                           -----------   -----------   -----------
      NET CASH (USED IN) FINANCING ACTIVITIES              $  (978,047)  $  (705,394)  $  (659,589)
                                                           -----------   -----------   -----------
      NET INCREASE (DECREASE) IN CASH AND CASH
         EQUIVALENTS                                       $    96,279   $   248,910   $   (22,061)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR             $   248,947   $        37   $    22,098
                                                           -----------   -----------   -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR                   $   345,226   $   248,947   $        37
                                                           ===========   ===========   ===========
</TABLE>


                                       70
<PAGE>

NOTE 25. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                             2007
                             -------------------------------------
                              FIRST     SECOND    THIRD     FOURTH
                             QUARTER   QUARTER   QUARTER   QUARTER
                             -------   -------   -------   -------
                                          In thousands
<S>                          <C>       <C>       <C>       <C>
Interest income               $4,230    $4,182    $4,348    $4,441
Interest expense               1,836     1,849     2,006     2,034
                              ------    ------    ------    ------
Net interest income            2,394     2,333     2,342     2,407
Provision for loan losses         63        35        31        40
Noninterest income               534       647       601       621
Noninterest expense            1,916     1,957     1,936     2,206
                              ------    ------    ------    ------
Income before income taxes       949       988       976       782
Provision for income taxes       323       332       314       222
                              ------    ------    ------    ------
Net income                    $  626    $  656    $  662    $  560
                              ======    ======    ======    ======
Basic earnings per share      $ 1.37    $ 1.43    $ 1.44    $ 1.24
                              ======    ======    ======    ======
</TABLE>

<TABLE>
<CAPTION>
                                             2006
                             -------------------------------------
                              FIRST     SECOND    THIRD     FOURTH
                             QUARTER   QUARTER   QUARTER   QUARTER
                             -------   -------   -------   -------
                                          In thousands
<S>                          <C>       <C>       <C>       <C>
Interest income               $3,685    $3,900    $4,153    $4,251
Interest expense               1,282     1,462     1,726     1,799
                              ------    ------    ------    ------
Net interest income            2,403     2,438     2,427     2,452
Provision for loan losses        112        74        44        46
Noninterest income               499       511       506       472
Noninterest expense            2,020     1,910     1,873     1,976
                              ------    ------    ------    ------
Income before income taxes       770       965     1,016       902
Provision for income taxes       238       318       386       321
                              ------    ------    ------    ------
Net results from
   discontinued operations         1        79         -       (1)
Net income                    $  533    $  726    $  630    $  580
                              ======    ======    ======    ======
Basic earnings per share      $ 1.16    $ 1.59    $ 1.37    $ 1.27
                              ======    ======    ======    ======
</TABLE>


                                       71

<PAGE>

ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
     DISCLOSURE

     There were no changes in or disagreements with accountants in accounting
     and financial disclosure.

ITEM 9A(T). CONTROLS AND PROCEDURES

     The Company's chief executive officer and chief financial officer have
     concluded that as of December 31, 2007, which is the end of the period
     covered by this Annual Report on Form 10-K, the Company's disclosure
     controls and procedures are adequate and effective for purposes of Rule
     13(a)-15(e) and timely, alerting them to material information relating to
     the Company required to be included in the Company's filings with the
     Securities and Exchange Commission under the Securities Exchange Act of
     1934.

     During the Company's review of the documentation and the remediations
     related to internal controls, improvements were made to the Company's
     internal controls over financial reporting in the fiscal quarter ended
     December 31, 2007. These changes could have materially affected, or are
     reasonably likely to materially affect, our internal controls over
     financial reporting.

     See Management's Report on Internal Control included in this Annual Report
     on Form 10-K at page 35.

ITEM 9B. OTHER INFORMATION

     None.


                                       72

<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The following table contains certain information, as of March 25, 2008,
     with respect to current directors, nominees for directors and certain
     officers of CNB.

<TABLE>
<CAPTION>
                              DIRECTOR      EXPIRATION OF TERM      PRINCIPAL OCCUPATION FOR PAST FIVE YEARS
         NAME           AGE     SINCE    BEING NOMINATED FOR (1)            AND POSITION HELD WITH CNB
         ----           ---   --------   -----------------------   -------------------------------------------
<S>                     <C>   <C>        <C>                       <C>
Kenneth W. Apple         51     2003               2009            Certified Public Accountant
J. Robert Ayers          79     1974               2011            Retired - President, Citizens National Bank
                                                                   (predecessor to CNB Bank, Inc.)
John E. Barker           79     1972               2011            Auto Sales - Service
Margaret S. Bartles      53     2002               2009            Realtor
Jay E. Dick              55     1983               2010            Retired - Manager-Hunters' Hardware, Inc.
Herbert L. Eppinger      75     1979               2011            Retired - Agriculture
Robert L. Hawvermale     78     1967               2011            Retired - Professional Engineer
J. Philip Kesecker       78     1965               2011            Real Estate Development
Jerry McGraw             61     1988               2010            Insurance
Martha H. Quarantillo    48     1999               2009            Pharmacist
Thomas F. Rokisky        61     1993               2010            President and Chief Executive Officer,
                                                                   CNB and CNB Bank, Inc.
Charles S. Trump IV      47     1986               2009            Attorney at Law
Arlie R. Yost            60     1988               2010            Licensed Residential Appraiser
</TABLE>

(1)  As described in the proxy statement, on April 2, 2008 the shareholders will
     vote on proposed amendments to the Articles of Incorporation and ByLaws
     which among other things will classify the Board of Directors into three
     classes with staggered three year terms. The information in this table is
     based on the presumption that these amendments will be approved by the
     shareholders. If the proposed amendments fail, the term for all directors
     would be one year.

     All nominees are incumbent directors of CNB Financial Services, Inc. All
     Board members are independent except for Mr. Rokisky, President and CEO of
     CNB and Charles Trump, IV, whose firm provides legal services for CNB.

     The names, ages and position of each executive officer of the company are
     listed below along with the positions with CNB Bank, Inc. held by each of
     them during the last five years. Officers are appointed annually by the
     Board of Directors at the meeting of directors immediately following the
     annual meeting.


                                       73

<PAGE>

<TABLE>
<CAPTION>
                         AGE AS OF MARCH
         NAME               25, 2008                      POSITION AND EXPERIENCE DURING THE PAST 5 YEARS
         ----            ---------------   ----------------------------------------------------------------------------
<S>                      <C>               <C>
J. Philip Kesecker (1)          78         2000 to present - Chairman of the Board, CNB Financial Services, Inc.
                                           1987 to present - Chairman of the Board, CNB Bank, Inc.

Thomas F. Rokisky               61         2000 to present - President/CEO, CNB Financial Services, Inc.
                                           1996 to present - President/CEO, CNB Bank, Inc.
                                           1990 to 1996 - Executive Vice President/COO, CNB Bank, Inc.

Rebecca S. Stotler              47         2007 to present - Senior Vice President/CFO, CNB Financial Services, Inc.
                                           2007 to present - Senior Vice President/CFO, CNB Bank, Inc.
                                           2000 to 2007 - Vice President/CFO, CNB Financial Services, Inc.
                                           1999 to 2007 - Vice President/CFO, CNB Bank, Inc.
                                           1996 to 1999 - Vice President of Finance/Cashier, Citizens National Bank

Patricia C. Muldoon             47         2007 to present - Executive Vice President/COO, CNB Financial Services, Inc.
                                           2007 to present - Executive Vice President/COO, CNB Bank, Inc.
                                           2003 to 2007 - Senior Vice President/COO, CNB Financial Services, Inc.
                                           2003 to 2007 - Senior Vice President/COO, CNB Bank, Inc.
                                           2001 to 2003 - Vice President/COO, Citizens National Bank
</TABLE>

     AUDIT COMMITTEE

     In 2007, members of the audit committee included Margaret S. Bartles,
     Chairperson, Arlie R. Yost, John E. Barker, Jerry McGraw, Jay E. Dick and
     Kenneth W. Apple, none of whom is employed by CNB. The Board of Directors
     has determined that each of the current members of the audit committee is
     "independent" within the meaning of the enhanced independent standards for
     audit committee members in the Securities Exchange Act of 1934 and rules
     thereunder, as amended, and as incorporated into the listing standards of
     the Nasdaq Stock Market, Inc. The Board of Directors has also determined
     that Kenneth W. Apple, CPA, member of the audit committee, is an "audit
     committee financial expert" within the meaning of the rules promulgated by
     the Securities and Exchange Commission and pursuant to the Sarbanes-Oxley
     Act of 2002. The audit committee held eleven meetings during fiscal year
     2007. The audit committee selects the company's independent registered
     public accounting firm (subject to shareholder ratification), considers the
     scope of the audit, reviews the activities and recommendations made by
     CNB's internal auditors, and considers comments made by the independent
     registered public accounting firm with respect to the company's internal
     control structure. No audit committee member attended fewer than 75% of the
     meetings held during the fiscal year ended December 31, 2007.

     CNB's Board of Directors has determined that Kenneth W. Apple, CPA, meets
     the requirements of an audit committee financial expert as defined by the
     Securities and Exchange Commission. The Board of Directors believes that
     Mr. Apple has the following five attributes that qualify him as an audit
     committee financial expert. This director, through education and
     experience, has:

          -    An understanding of financial statements and generally accepted
               accounting principles;


                                       74

<PAGE>

          -    An ability to assess the general application of generally
               accepted accounting principles in connection with accounting for
               estimates, accruals and reserves;

          -    Some experience in preparing, auditing, analyzing and evaluating
               financial statements that present a level of complexity of
               accounting issues comparable to the breadth of issues that could
               reasonably be expected to be presented by CNB's financial
               statements;

          -    An understanding of internal controls; and

          -    An understanding of audit committee functions.

     Mr. Apple acquired these attributes through his Bachelor of Science degree
     from Shepherd College in Shepherdstown, West Virginia, and over 25 years of
     experience in public accounting, including auditing.

     Section 16 (a) of the Securities Exchange Act of 1934 requires CNB's
     directors and executive officers, and persons who own more than 10% of the
     registered class of CNB's equity securities, to make stock ownership and
     transaction filings with the Securities and Exchange Commission and to
     provide copies to CNB. Based solely on a review of the reports furnished to
     CNB and written statements that no other reports were required, all Section
     16(a) filing requirements applicable to its officers and directors were
     met.

     CODES OF ETHICS

     Both CNB and the Bank have adopted Codes of Ethics as defined by the rules
     of the SEC. The Code of Ethics applies to all of CNB's and the Bank's
     directors, officers, including the Bank's Chief Executive Officer and Chief
     Financial Officer, and employees. Additionally, CNB and the Bank have
     adopted a Code of Ethics for Senior Financial Officers. The codes of ethics
     for all employees and for senior financial officers of CNB and the Bank
     have been filed as an exhibit to this Annual Report on Form 10-K. If CNB or
     the Bank makes substantive amendments to the Code of Ethics or the Code of
     Ethics for Senior Financial Officers or grants any waiver, including any
     implicit waiver, that applies to any director or executive officer of CNB
     or the Bank, it will disclose the nature of such amendment or waiver on the
     website or in a report on Form 8-K in accordance with applicable SEC rules.

ITEM 11. EXECUTIVE COMPENSATION

     The personnel committee of the board of directors has furnished the
     following report on executive compensation. The personnel committee has not
     adopted a charter.

     GENERAL PHILOSOPHY

     We compensate our senior management through base salary and a benefits
     package designed to be competitive with comparable employers. We believe
     that information regarding pay practices at other financial institutions is
     useful in at least two respects. First, we recognize that our compensation
     practices must be competitive in the marketplace. Second, this marketplace
     information is one of the many factors that the President and the Personnel
     Committee consider in assessing the reasonableness of compensation. The
     President and the Personnel Committee do not attempt to set salaries for
     executive officers within the industry peer ranges. As only a guideline,
     the individual executive officer's salaries are compared to the salary
     survey ranges for the specific job classifications to ensure
     competitiveness in the market. The President and the Personnel Committee
     rely more on individual performance and contribution to the bank, reporting
     structure, internal pay relationship, job responsibilities, growth
     potential, leadership abilities and the overall bank's performance for the
     previous year.

     The committee establishes the compensation for the Chief Executive Officer
     of CNB and the bank and reviews all personnel related issues including
     salary administration related to other employees and benefit programs. The
     CEO establishes compensation levels for executive officers and all other
     personnel which is reviewed by the personnel committee. Committee
     objectives include administration of a total compensation package that
     allows CNB to fill key executive positions with qualified individuals and
     to utilize effective compensation programs which are directly related to
     executive officers accomplishing corporate goals and objectives, both
     operational and financial, aimed at achieving lasting improvement in CNB's
     long-term financial performance. We rely upon our judgment about each
     individual executive officer and not on rigid formulas or short-term
     changes in business performance in determining the amount.


                                       75

<PAGE>

          The corporate goals and objectives include:

     -    Increase return on shareholders' investment

     -    Increase return on assets

     -    Increase return on equity

     -    Increase market share

     -    Continued strong asset growth

     -    Maintain a high quality loan portfolio with strong underwriting
          standards

     -    Maintain a high quality investment portfolio

     The committee and the CEO utilize human resources' staff, and, as
     appropriate, other qualified consultants to review compensation practices
     as they compare to industry norms. In 2007, the committee relied only on
     CNB's human resources' staff for information concerning industry norms.

     COMPENSATION PROGRAMS

          The committee utilizes an internal salary administration plan for the
     basis of its analysis of compensation levels throughout CNB, including the
     CEO. The plan includes job descriptions for all positions and considers the
     overall responsibility of each position based on characteristics including
     job knowledge, problem-solving, accountability, human relations,
     communications, supervision of others and marketing. Salary ranges for each
     position are developed based on market information available for similar
     positions at financial institutions both in the communities where CNB does
     business and outside its market area. Salary surveys utilized include those
     provided by the West Virginia Bankers Association and Topnet (a group of
     West Virginia non-competing independent community banks). These results are
     used annually by the human resources staff to update the salary
     administration plan using current market data which reflects marketplace
     changes, inflation, and, if applicable, corporate performance. The salary
     surveys performed a comparison study of the current compensation of the CEO
     and other executive officers at the bank with comparable financial
     institutions (the "Peer Group"). The Peer Group was used to provide
     information regarding executive compensation levels against other financial
     institutions of similar asset size. The personnel committee reviews the
     compensation data compiled in these surveys to ensure that our executive
     compensation program is competitive.

          The individual components of CNB's compensation program include:

     (a)  Base Salary.

     a. Base salary levels are established for the CEO primarily based upon
     evaluation of the historical performance, degree of responsibility, level
     of experience and number of years with CNB. With respect to the base salary
     granted to Mr. Rokisky for the year 2007, the personnel committee took into
     account the performance during 2006 and information referred to above.
     Particular emphasis was placed on Mr. Rokisky's individual performance,
     including his leadership role through a period of continued growth, and
     CNB's continued strong financial performance. For the year 2008, the
     committee has established certain goals and objectives for the Chief
     Executive Officer, Chief Operations Officer, Chief Financial Officer and
     Chief Lending Officer to attain. The achievement of these goals and
     objectives may contribute to future salary increases and possible bonuses.
     In comparing Mr. Rokisky's salary to financial institutions in the Peer
     Group, his salary falls in the average range. Mr. Rokisky has no input into
     the determination of his salary.

     b. Base salary levels are established for the Executive Vice
     President/Chief Operations Officer, the Senior Vice President/Chief
     Financial Officer and the Senior Vice President/Chief Lending Officer
     primarily based upon evaluation of their historical performance, degree of
     responsibility, industry average percentage increase and the bank's


                                       76

<PAGE>

     performance for the previous year. Mr. Rokisky determines the salaries for
     these individuals. As a guideline, Mr. Rokisky compares these individual
     salaries to the salary survey ranges for these job classifications from the
     West Virginia Bankers Association and Topnet.

     (b)  Annual Incentives/Bonuses.

     Beginning in 2007, bonuses were paid to the President/Chief Executive
     Officer, Executive Vice President/Chief Operations Officer, Senior Vice
     President/Chief Financial Officer and the Senior Vice President/Chief
     Lending Officer based on the bank's historical performance The compensation
     committee is in the process of developing a structured bonus program based
     on certain tangible criteria which will be put into place beginning with
     the fiscal year 2008. Contributions to the 401(k) plan on behalf of all
     employees who defer into the plan are based on bank performance as a
     percentage of assets.

     The personnel committee believes that the total compensation awarded to the
     Chief Executive Officer and other executive officers of CNB is consistent
     with the committee's objectives. The amounts paid to individual executives
     are consistent with competition within the market and with banks of similar
     size as reflected by individual performance of each executive, and are
     rationally linked with the fulfillment of corporate objectives and
     corporate financial performance.

     EXECUTIVE COMPENSATION - SUMMARY COMPENSATION TABLE

          The following table sets forth for each of the Named Executive
     Officers: (a) the dollar value of base salary and bonus earned during the
     year ended December 31, 2007; (b) the change in pension value and
     nonqualified deferred compensation earnings during the year, (c) all other
     compensation for the year; and, finally, (d) the dollar value of total
     compensation for the year.


                                       77

<PAGE>

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                    CHANGE IN PENSION
                                                        VALUE AND
                                                       NONQUALIFIED
                                                         DEFERRED
 NAME AND PRINCIPAL                                    COMPENSATION     OTHER ANNUAL       TOTAL
      POSITION        YEAR    SALARY     BONUS          EARNINGS        COMPENSATION   COMPENSATION
 ------------------   ----   --------   -------     -----------------   ------------   ------------
<S>                   <C>    <C>        <C>         <C>                 <C>            <C>
Thomas F.             2007   $147,411   $25,557(3)       $56,266        $21,197(1)(2)    $238,931
Rokisky,              2006   $140,571   $    --          $44,507        $23,906(1)(2)    $208,984
President/CEO         2005   $126,592   $    --          $54,930        $22,845(1)(2)    $149,437

Patricia C.           2007   $ 93,273   $15,057(3)       $ 7,093        $ 1,840(1)(2)    $110,263
Muldoon,              2006   $ 85,075   $    --          $ 7,563        $ 3,158(1)(2)    $ 95,796
Exec. VP/COO          2005   $ 83,399   $    --          $ 9,146        $ 3,097(1)(2)    $ 86,496

Rebecca S.            2007   $ 71,770   $12,269(3)       $ 5,191        $ 1,421(1)(2)    $ 85,151
Stotler,              2006   $ 67,695   $    --          $ 9,184        $ 2,510(1)(2)    $ 79,389
Sr. VP/CFO            2005   $ 62,683   $    --          $15,740        $ 2,326(1)(2)    $ 65,009
</TABLE>

(1)  CNB's group life and health insurance program, which is paid for by CNB, is
     made available to all full-time employees. Effective January 1, 2005, the
     bank changed its health insurance program to a high deductible plan and
     concurrently established health reimbursement accounts for each employee on
     the plan. The bank funded $750 for each participant in 2007. In accordance
     with IRS Code Section 79, the cost of group life insurance coverage for an
     individual in excess of $50,000 is added to the individual's earnings and
     is included in salary. Also included in this figure are Board fees earned
     and the corporation's contributions to the individual's 401(k) retirement
     savings program to which the individual has a vested interest.

(2)  CNB's contributions to the pension plan, a defined benefit plan, are not
     and cannot be calculated separately for specific participants.
     Contributions for all participants for the plan year of $387,767, $413,170
     and $285,150 were made by CNB in 2007, 2006 and 2005, respectively.

(3)  Bonuses include amounts paid and accrued for in 2007.

          CNB does not maintain any form of stock option, stock appreciation
     rights, or other long-term compensation plans.

     The following table discloses the actuarial present value of each Senior
     Executive's accumulated benefit under defined benefit plans, the number of
     years of credited service under each plan, and the amount of pension
     benefits


                                       78

<PAGE>

     paid to each Senior Executive during the year.

                             PENSION BENEFITS TABLE

<TABLE>
<CAPTION>
                                                                       NUMBER OF
                                                                         YEARS      PRESENT VALUE    PAYMENTS
                                                                        CREDITED   OF ACCUMULATED   DURING LAST
              NAME                               PLAN NAME              SERVICE        BENEFIT      FISCAL YEAR
              ----                   -------------------------------   ---------   --------------   -----------
<S>                                  <C>                               <C>         <C>              <C>
Thomas F. Rokisky, President/CEO     Allegheny Group Retirement Plan       18         $312,764          $--
                                     NSRP (1)                              --         $137,349          $--
Patricia C. Muldoon, Exec. VP/COO    Allegheny Group Retirement Plan        6         $ 34,636          $--
Rebecca S. Stotler, Sr. VP/CFO       Allegheny Group Retirement Plan       24         $ 62,820          $--
</TABLE>

(1)  Effective January 2, 2004, CNB entered into a nonqualified supplemental
     retirement benefit agreement with the President which when fully vested
     would pay the President or his beneficiary an amount of $30,000 per year
     for 10 years beginning June 11, 2011, if he retires on or after May 29,
     2011. Termination of employment prior to that date other than by reasons of
     death or disability will result in a reduced benefit. The expense charged
     to operations related to the plan during 2007 amounted to $39,426. The
     benefits to be provided by this plan are not being funded by current
     resources.

     CNB maintains a non-contributory defined benefit pension plan with employer
     contributions being based on a pension formula, which targets a certain
     monthly benefit for each plan participant at retirement. This pension plan
     is a qualified retirement plan and is available to all full-time employees,
     including officers, who meet the eligibility requirements. Directors do not
     participate in this plan.

     The pension plan is integrated with social security and is applicable to
     all participants. Pensions for all participants are based on an average of
     the highest five-years compensation. Annual compensation for the pension
     plan is defined as the total cash remuneration reportable on the employee's
     IRS form W-2, plus pre-tax contributions to employee benefit plans. The
     formula for determining the annual pension benefit is 2.0 percent of the
     5-year average compensation multiplied by years of service up to a 25-year
     maximum effective for the plan year beginning November 1, 2004.

     The pension benefits are payable to participants on a monthly basis in the
     form of a joint and 50 percent survivor annuity for all married
     participants who do not elect otherwise, or in the form of a single life
     annuity for all other participants or survivors. Joint and 100 percent
     survivorship, single life annuity or 120 payments guaranteed are other
     optional forms of distribution. The normal retirement date for employees is
     the later of the participant's 65th birthday, or the fifth anniversary of
     the participant joining the plan. An employee must be at least 21 years of
     age and have one full year of service to become a plan participant. Full
     vesting in accumulated plan benefits occurs at the end of five years of
     service; there is no partial vesting. For the 2007 plan year, the employer
     contribution for all plan participants was $387,767.

     The following table disclosed the cash and other compensation earned and
     paid to each of the Company's directors during the fiscal year ended 2007.


                                       79

<PAGE>

                                 DIRECTORS TABLE

<TABLE>
<CAPTION>
                                               CHANGE IN
                                             PENSION VALUE
                                                  AND
                                             NONQUALIFIED
                               FEES EARNED     DEFERRED
                                OR PAID IN    COMPENSATION     ALL OTHER       TOTAL
         NAME           YEAR      CASH        EARNINGS (1)   COMPENSATION   COMPENSATION
         ----           ----   -----------   -------------   ------------   ------------
<S>                     <C>    <C>           <C>             <C>            <C>
J. Philip Kesecker      2007     $21,650        $    --           $--          $21,650
Kenneth W. Apple        2007     $17,625        $    --           $--          $17,625
J. Robert Ayers         2007     $16,875        $    --           $--          $16,875
John E. Barker          2007     $15,825        $    --           $--          $15,825
Margaret S. Bartles     2007     $15,500        $ 2,273           $--          $17,773
Jay E. Dick             2007     $17,300        $25,206           $--          $42,506
Herbert L. Eppinger     2007     $17,517        $ 1,023           $--          $18,540
Robert L. Hawvermale    2007     $15,325        $    --           $--          $15,325
Jerald McGraw           2007     $17,800        $15,348           $--          $33,148
Martha H. Quarantillo   2007     $14,875        $ 2,273           $--          $17,148
Thomas F. Rokisky (2)   2007     $11,200        $    --           $--          $11,200
Charles S. Trump IV     2007     $14,850        $13,796           $--          $28,646
Arlie R. Yost           2007     $15,925        $15,348           $--          $31,273
</TABLE>

(1)  Refer to page 13 Board Compensation for a more detailed discussion of the
     director's deferred compensation plan.

(2)  Executive officer of CNB

     Directors receive $200 for each Board meeting of the bank they attend, $175
     for each discount committee meeting, $150 for each audit committee meeting
     and $100 for other committee meetings they attend. There is no compensation
     for attendance at CNB Board meetings. However, each director receives a fee
     of $6,000 per year. The chairman of the Board receives an additional $3,500
     per year and the vice chairman receives an additional $1,000 per year.
     Other than the deferred compensation plan described below, there are no
     other special arrangements with any directors. In 2007, the Board of
     Directors of CNB received $212,150, in the aggregate, for all Board of
     Directors' meetings attended and all fees paid.

     CNB maintains a deferred compensation plan for directors pursuant to which
     a director may elect to defer receipt of a portion of fees for Board
     meetings for at least four years or until he reaches age 65, whichever is
     later. An amount equal to fees waived in addition to interest at an annual
     rate of 10% per year will be paid to each participating director or his
     designated beneficiary during a period of 10 years after the director
     reaches age 65. The payments after retirement will be paid from the general
     funds of CNB. CNB purchases and is the beneficiary of insurance on the
     lives of participants, the proceeds of which are used to help recover the
     net after-tax cost of the benefits and insurance premiums paid. Funds from
     the deferred fees of a participating director will be used to reimburse CNB
     for the costs of the premium for the insurance policies. The cost of the
     insurance premiums in 2007 was $58,434. At December 31, 2007, these
     policies had a net accumulated cash value of $1,491,093.

     PERSONNEL COMMITTEE REPORT

     The Personnel Committee held five meetings during fiscal year 2007. The
     Personnel Committee has reviewed and discussed the Compensation Discussion
     and Analysis required by Item 402(b) of Regulation S-K with management.
     Based upon such review, the related discussions and such other matters
     deemed relevant and appropriate by the Personnel Committee, the Personnel
     Committee has recommended to the Board of Directors that the Compensation
     Discussion and Analysis be included in this proxy statement to be delivered
     to shareholders.


                                       80

<PAGE>

     The foregoing report has been furnished by the current members of the
     personnel committee.

     Jay E. Dick, Personnel Committee Chairperson
     Robert L. Hawvermale, Personnel Committee Member
     Herbert L. Eppinger, Personnel Committee Member
     Charles S. Trump IV, Personnel Committee Member
     J. Robert Ayers, Personnel Committee Member
     J. Philip Kesecker, Ex-Officio member

     December 26, 2007

     This report shall not be deemed to be incorporated by reference into any
     filing under the Securities Act of 1933, as amended, or the Securities
     Exchange Act of 1934, as amended, unless CNB specifically incorporates this
     report by reference. It will not otherwise be filed under such Acts.

     PERSONNEL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Loans were made to various directors and officers of CNB. These loans were
     made in the ordinary course of business, made on substantially the same
     terms, including interest rate and collateral requirements, as those
     prevailing at the time for comparable transactions with unrelated customers
     and did not involve more than a normal risk of collectibility or present
     other unfavorable features.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT

     The following table sets forth information as of February 21, 2008,
     relating to the beneficial ownership of the common stock by (a) each person
     or group known by CNB to own beneficially more than 5% of the outstanding
     common stock; (b) each of CNB's directors; and (c) all directors and
     executive officers of CNB as a group. Unless otherwise noted below, the
     persons named in the table have sole investment power with respect to each
     of the shares reported as beneficially owned by such person.

<TABLE>
<CAPTION>
                                                                    NUMBER OF   PERCENT OF
                         NAME AND ADDRESS                             SHARES     CLASS (1)
                         ----------------                           ---------   ----------
<S>                                                                 <C>         <C>
Kenneth W. Apple (2) (15)                                              1,650          *
J. Robert Ayers (3) (15)                                               1,415          *
John E. Barker (4) (15)                                               18,394       4.04
Margaret S. Bartles (5) (15)                                             200          *
Jay E. Dick (6) (15)                                                  15,691       3.45
Herbert L. Eppinger (7) (15)                                           2,870          *
Robert L. Hawvermale (8) (15)                                          3,730          *
J. Philip Kesecker (9) (15)                                           13,282       2.92
Jerald McGraw (10) (15)                                                1,514          *
Martha H. Quarantillo (15)                                               400          *
Thomas F. Rokisky (11) (15)                                            1,544          *
Charles S. Trump IV (12) (15)                                         11,410       2.51
Arlie R. Yost (13) (15)                                                2,210          *
Rebecca S. Stotler (14) (15)                                             194          *
All directors and executive officers as a group (14 persons) (15)     74,504      16.38
D. Louise Stotler and Deborah Dhayer
   RR 6 Box 12460, Berkeley Springs, WV, 25411                        47,488      10.44
Mary Lou Trump
   298 Grove Heights, Berkeley Springs, WV, 25411                     53,470      11.75
</TABLE>


                                       81

<PAGE>

*    Indicates holdings of less than 1%.

(1)  Includes shares of common stock held by the named individual as of February
     21, 2008.

(2)  Includes 1,000 shares held in an Individual Retirement Account.

(3)  Includes 1,315 shares held jointly with spouse.

(4)  Includes 14,300 shares held jointly with spouse and 3,794 shares held
     jointly with children.

(5)  Includes 100 shares held jointly with spouse.

(6)  Includes 15,591 shares held jointly with spouse.

(7)  Includes 2,770 shares held jointly with spouse.

(8)  Includes 1,200 shares held by spouse and 100 shares held jointly with
     spouse.

(9)  Includes 3,098 shares held by spouse and 1,860 shares held jointly with
     spouse.

(10) Includes 110 shares held by spouse and 964 shares held jointly with spouse.

(11) Includes 1,425 shares held in an Individual Retirement Account.

(12) Includes 200 shares held in an Individual Retirement Account, 842 shares
     held by spouse and 300 shares held as custodian for children.

(13) Includes 1,770 shares held jointly with spouse.

(14) Includes 108 shares held jointly with spouse, 74 shares held by spouse and
     12 shares held jointly with child.

(15) Unless otherwise indicated shares are not pledged as security.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     CNB has had and intends to continue to have banking and financial
     transactions in the ordinary course of business with directors and
     executive officers of CNB and their associates. All loans to executive
     officers and directors and their associates are approved prior to
     disbursement by the discount committee and/or the Board of Directors. These
     approvals are evidenced by the discount committee and/or Board minutes. The
     bank's loan policy and Regulation "O" policy governs these transactions.
     Total loans outstanding from CNB at December 31, 2007, to CNB's officers
     and directors as a group and members of their immediate families and
     companies in which they had an ownership interest of 10% or more was
     $1,999,561, or approximately 8.8% of total equity capital and 1.0% of total
     loans. Management believes that all of these transactions were made on
     substantially the same terms (including interest rates, collateral and
     repayment terms on loans) as comparable transactions with non-affiliated
     persons. These loans do not involve more than the normal risk of
     collectibility or present other unfavorable features.

     All nominees are incumbent directors of CNB Financial Services, Inc. All
     directors are independent except for Mr. Rokisky, President and CEO of CNB
     and Charles S. Trump IV, whose firm provides legal services for CNB.

     Trump and Trump, in which director Charles S. Trump, IV is a partner,
     performed legal services for CNB and the bank. Fees paid by CNB and the
     bank to that law firm were $44,092 during 2007.

     CNB, Charles S. Trump, IV and George I. McVey are members in a Limited
     Liability Company, Morgan County Title Insurance Agency, LLC, which was
     formed in February 2001. Morgan County Title Insurance Agency, LLC, paid
     Trump and Trump management fees of $26,776. Charles S. Trump, IV and George
     I. McVey are partners in Trump and Trump.

ITEM 14. PRINCIPAL ACCOUNTANT'S FEES AND SERVICES

     Subject to ratification by CNB's shareholders, the firm of Smith Elliott
     Kearns & Company, LLC, Certified Public Accountants, has been selected as
     CNB's independent registered public firm for the year 2008. Representatives
     of Smith Elliott Kearns & Company, LLC are expected to be present at the
     Annual Meeting. The representatives may, if they wish, make a statement
     and, it is expected, will be available to respond to appropriate questions.

     Smith Elliott Kearns & Company, LLC, advised CNB that no member of that
     accounting firm has any direct or indirect material interest in CNB or its
     subsidiary.

     The following fees were paid by CNB and the bank to Smith Elliott Kearns &
     Company, LLC:


                                       82

<PAGE>

<TABLE>
<CAPTION>
                           2007      2006
                         -------   -------
<S>                      <C>       <C>
Audit Fees (a)           $72,670   $68,400
Audit-Related Fees (b)    19,768       -0-
Tax Fees (c)              12,050    10,010
All Other Fees (d)         8,200     5,500
</TABLE>

(a)  Principally professional services rendered for the audit of the
     consolidated financial statements of CNB and review of the financial
     statements included in Form 10Q.

(b)  Principally review of regulatory filings and attendance at audit committee
     meetings.

(c)  Principally tax compliance services (including federal and state returns).

(d)  Principally consultation related to SEC inquiries and agreed upon
     procedures related to the trust department.

The audit committee charter requires that the audit committee pre-approve all
audit and non-audit services to be provided to CNB by the independent
accountants; provided, however, that the audit committee has specifically
authorized its chairperson to pre-approve the provision of any non-audit service
to the CNB. Further, the foregoing pre-approval policies may be waived, with
respect to the provision of any non-audit services consistent with the
exceptions for federal securities law. All of the services described above for
which Smith Elliott Kearns & Company, LLC billed CNB during the fiscal year
ended December 31, 2007, were pre-approved by CNB's audit committee. For the
fiscal year ended December 31, 2007, CNB's audit committee did not waive the
pre-approval requirement of any non-audit services to be provided to CNB by
Smith Elliott Kearns & Company, LLC.

The audit committee of the Board of Directors has determined that the provision
of such services is compatible with maintaining Smith Elliott Kearns & Company,
LLC's independence.


                                       83

<PAGE>

                                     PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a)  1.   Financial Statements

          The consolidated financial statements listed on the index to Item 8 of
          this Annual Report on Form 10-K are filed as a part of this Annual
          Report.

          2.   Financial Statement Schedules

          All schedules applicable to the Registrant are shown in the respective
          financial statements or in the notes thereto included in this Annual
          Report.

          3.   Exhibits

          2.2 Articles of Incorporation of CNB Financial Services, Inc. filed as
          exhibit 3.1 to the Registration Statement on Form S-4 , Registration
          No. 333-36186, filed May 3, 2000 with the Securities and Exchange
          Commission and incorporated by reference herein.

          2.3 Bylaws of CNB Financial Services, Inc. filed as exhibit 3.2 to the
          Registration Statement on Form S-4, Registration No. 333-36186, filed
          May 3, 2000 with the Securities and Exchange Commission and
          incorporated by reference herein.

          14   Code of Ethics filed as an exhibit hereto.

          21 Subsidiaries of CNB Financial Services, Inc. filed as an exhibit
          hereto.

          31.1 Certification of the Chief Executive Officer pursuant to 18
          U.S.C. Section 1350, as adopted pursuant to Section 302 of the
          Sarbanes-Oxley Act of 2002

          31.2 Certification of the Chief Financial Officer pursuant to 18
          U.S.C. Section 1350, as adopted pursuant to Section 302 of the
          Sarbanes-Oxley Act of 2002

          32.1 Certification of the Chief Executive Officer pursuant to 18
          U.S.C. Section 1350, as adopted pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002

          32.2 Certification of the Chief Financial Officer pursuant to 18
          U.S.C. Section 1350, as adopted pursuant to Section 906 of the
          Sarbanes-Oxley Act of 2002

     (b)  See (a) 3 above.

     (c)  See (a) 1 and 2 above.


                                       84

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

CNB Financial Services, Inc.
        (Registrant)


Date March 28, 2008                     /s/ Thomas F. Rokisky
                                        ----------------------------------------
                                        Thomas F. Rokisky, President/CEO


Date March 28, 2008                     /s/ Rebecca S. Stotler
                                        ----------------------------------------
                                        Rebecca S. Stotler, Senior Vice
                                        President/CFO
                                        (Principal Financial and Accounting
                                        Officer)


                                       85

<PAGE>

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
     report has been signed below by the following persons on behalf of the
     registrant in the capacities indicated on the 28th March 2008.

<TABLE>
<CAPTION>
              Signatures                         Title
              ----------                 ---------------------
<S>                                      <C>


        /s/ J. Philip Kesecker           Chairman and Director
--------------------------------------
          J. PHILIP KESECKER


         /s/ Thomas F. Rokisky           President/CEO and
--------------------------------------   Director
           THOMAS F. ROKISKY


         /s/ Kenneth W. Apple            Director
--------------------------------------
           KENNETH W. APPLE


          /s/ J. Robert Ayers            Director
--------------------------------------
            J. ROBERT AYERS


          /s/ John E. Barker             Director
--------------------------------------
            JOHN E. BARKER


        /s/ Margaret S. Bartles          Director
--------------------------------------
          MARGARET S. BARTLES


            /s/ Jay E. Dick              Director
--------------------------------------
              JAY E. DICK


        /s/ Herbert L. Eppinger          Director
--------------------------------------
          HERBERT L. EPPINGER


       /s/ Robert L. Hawvermale          Director
--------------------------------------
         ROBERT L. HAWVERMALE


           /s/ Jerald McGraw             Director
--------------------------------------
             JERALD MCGRAW


       /s/ Martha H. Quarantillo         Director
--------------------------------------
         MARTHA H. QUARANTILLO


        /s/ Charles S. Trump IV          Director
--------------------------------------
          CHARLES S. TRUMP IV


           /s/ Arlie R. Yost             Director
--------------------------------------
             ARLIE R. YOST
</TABLE>


                                       86